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If Carissa has a $168,000 home insured for $100,000, based onthe 80 percent coinsurance provision,...

If Carissa has a $168,000 home insured for $100,000, based on the 80 percent coinsurance provision, how much would the insurance company pay on a $14,700 claim?

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Expert Solution

The amount that the insurance company pay on a $ 14,700 claim is computed as follows:

Coinsurance requirement is computed as follows:

= 0.80 × Value of home
= 0.80 × $168,000

= $134,400

Amount paid = (Insurance coverage / Coinsurance requirement) × Claim amount
Insurance coverage = $ 100,000

Coinsurance requirement = $ 134,400

Claim amount = $ 14,700
By plugging these values in the above mentioned formula, we shall get

= ($100,000 / $134,400) × $14,700
= $ 10,937.5

So the amount that the insurance company pay on a $ 14,700 claim is $ 10,937.5

jeff jeffy answered 2 years ago
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