Asked by Gisèle Mouawad on May 07, 2024
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The Morgan Company warehouse was valued at $2,400,000. The building was insured for $960,000. The policy contained an 80% coinsurance clause. A fire caused $660,000 in damages. Compute the amount the Morgan Company recovered from the insurance company for fire damage.
Coinsurance Clause
A provision in an insurance policy that requires the policyholder to bear a portion of the loss in proportion to the coverage amount, encouraging them to insure the property to its full value.
Fire Damage
The destruction or harm caused to property, structures, or objects by fire.
Insurance Company
An entity that provides financial protection and compensation for losses or damages in exchange for payment of premiums.
- Conduct an assessment and quantification of how coinsurance clauses influence claims in the context of property and casualty insurance.
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Learning Objectives
- Conduct an assessment and quantification of how coinsurance clauses influence claims in the context of property and casualty insurance.