Chap 6 Quiz
by Magalie Octave - Dear Jan,
can you explain this question, please?
Thank you.
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?
Select one:
A. $100,000
B. $102,000
C. $125,000
D. 107,000. The deductible applies to the loss, not to the amount of insurance.
Re: Chap 6 Quiz
by Jan Bradburn- - Magalie,
The deductible is always subtracted from the loss. In this case the loss is the value of property, or $125,000. Subtract the deductible - $125,000 - $5000 = $120,000. The amount payable would be $120,000, but the insured only has $100,000 coverage, so $100,000 is payable for the loss. The cost of debris removal is paid "in addition to" the loss. The total payable is $107,000.
jan
Re: Chap 6 Quiz
by Magalie Octave - Thank you Jan. I got it now!
Magalie