Question

Toy City (TC) is a toy store that operates in leased space in a shopping center. The contents of TC are insured for $200,000 under a building and personal property coverage form (BPP) with a value reporting form attached. A monthly reporting requirement applies. What dollar amount will be paid in each of the following situations? Treat each situation separately. Show your calculations and disregard any deductibles that might apply

a. Three weeks after the first report was due, but before TC made the report, a fire damaged property valued at $60,000.

b. The automatic sprinkler system accidentally discharged and damaged property valued at $45,000. TC reported a value of $144,000 in its last report (on time), but the actual value of its contents when the last report was made was $180,000.

Answer 1

Here in this case, first need to check whether TC has Insurable interest or not?

Answer is Yes, he has insurable interest though he is not the owner but he took the building for lease to run his business and to avoid any uncertain risk during the course of business he go for the insurance.

Sum Insured is 200,000$ covering property and building

Monthly filing the report assume that filing the report is the premium payment time for the insurance

Here you go on First Situation

1) If they already paid the premium then there is no question directly we can able to cover the amount for which it damaged, here you can claim for $60,000

Please note that thought we insurance for $200,000, Only to the extend of damaged portion value can claim in the fire insurance

If they wouldn't pay the premium before the incident then it will not eligible to claim the insurance amount.

2) Assume that premium paid,

Damaged property value: $45000

TC reported Value $144,000

Actual Value $180,000

As mentioned above Only can claim to extend of damaged property value, here it is $45,000 can claim.