answer:
$107,000. The deductible applies to the loss ($125,000), not to the amount of insurance.
The Question:
The insured's covered building, with a value of $125,000, insured for $100,000, was a total loss from a covered cause of loss. Cost of removing debris, after loss, was $7,000. The policy deductible is $5,000. With no other coverage issues, how much is payable to the insured?
can you please explain this i am confused. is the value not an important fact ? and how does the deductable come into play regarding commercial property ?
unit 6
thank you
cindy
What I get from this question is the deductible applies to the total loss so 125,000 - 5,000=120,000. But he only had 100,000 in coverage so it will pay out 100,000. And the debris removal pays out in addition to the 100,000. So in total they would pay him 107,000.
That's correct. Keep in mind the insured still suffers a $20,000 loss because he didn't insure his property to the actual value.