A structure worth $200,000 has an 80% coinsurance requirement. It is insured for $160,000 and sustains a $40,000 loss with a $1,000 deductible. What does the insurer pay?

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Multiple choice — select the best answer

A$31,000
B$32,000
C$39,000
D$40,000

✓ Correct answer: C. $39,000 Carried ($160,000) meets the required amount (80% x $200,000 = $160,000), so no coinsurance penalty applies. The insurer pays the full loss less the deductible: $40,000 - $1,000 = $39,000.

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Topic: Property Insurance

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A structure worth $200,000 has an 80% coinsurance requirement. It is insured for $160,000 and sustains a $40,000 loss with a $1,000 deductible. What does the insurer pay?

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