Question

In: Finance

A company has three buildings and the corresponding insurace: () building A is covered by a property Insurance of which maximum Indemnity is $10,000;


A company has three buildings and the corresponding insurace: () building A is covered by a property Insurance of which maximum Indemnity is $10,000; (l) building B is covered by a property insurance of which maximum indemnity is $5,000, and (1) building is covered by a valued policy of which sum insured is $10,000. Unfortunately, all three buldings were damanaged by a covered peril, and the value of each building decreases from $9116 to $1593. How much is the company paid by the three policies? 

(Assume that the policies do not have average clauses.) 


Select one: 

a. $23,232.00 b. $14,268.56  c. $20,775.52 d. $25,000.00 e. $20,046.00

Solutions

Expert Solution

Three buildings are covered by insurance policies and their maximum indemnities are stated which means, in the event of any condition happening as covered by the policy, the insurer will be liable to pay up to maximum indemnity or loss occurred whichever is lower.

Damage is equal in all buildings i.e. 9,116 to 1,593 = $ 7,523

Building Maximum Indemnity (a) Damage (b)

Claim by insurer

(a or b whichever is lower)

A 10,000 7,523 7,523
B 5,000 7,523 5,000
C 10,000 7,523 7,523
Total Claim 20,046

The company is paid $ 20,046 by the three companies.


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