Answered: Calculate the amount to be paid by the…

Calculate the amount to be paid by the insurance company for the claim. Replacement Value of a building $360,000 Face Value of the Policy $300,000 Coinsurance clause 90 % Amount of Losee $145,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 47P

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Concept explainers

Property Insurance

Property insurance protects property from unforeseeable loss or damage and covers property owners' liability. Property insurance provides financial compensation to the property owner or renter in the event of damage or theft, as well as to someone other than the owner or renter if that person is injured on the property. Property insurance covers all risks of damage caused by theft, fire, flood, cyclones, lighting, and natural calamities, among other things. The primary goal of property insurance is to require the property owner to cover the loss. A monthly premium is paid to the insurance company, and in exchange, the insurance company pays for damage based on the agreement stated in the policy. Property insurance protects assets such as a vehicle, auto, car, rental home, house, and valuable property.

Question

Calculate the amount to be paid by the insurance company for the claim.

Replacement Value of a building $360,000

Face Value of the Policy $300,000

Coinsurance clause 90 %

Amount of Losee $145,000

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