Rajab has a bookstore near a sea shore, which is insured for €150,000 under a commercial...

Rajab has a bookstore near a sea shore, which is insured for €150,000 under a commercial property insurance policy. The policy contains an 80 percent coinsurance clause. Rajab’s bookstore suffered a loss worth €100,000 due to tsunami. If the replacement cost of the bookstore at the time of loss is €250,000, how much will he collect from his insurer? Rajab will collect €Answer for the loss from his insurer.

Expert Solution

Amount to be collected from Insurer
= [Amount of Insurance / (Amount of Replacement * % of coinsurance)]*Amount of Loss
= [$150000 / ($25000080%)] $100000
= [$150000 / $200000] * $100000
= 0.75 * $100000
= $75000

jeff jeffy answered 2 years ago

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