How Much Will Jason Receive from the Insurer for His Buildings?

How much will Jason collect from the insurer?

If Jason suffered a loss of $2.4 million ($1 million on building 1, $0.9 million on building 2, and $0.5 million on building 3), how much money will he receive from the insurer? Suppose there is no deductible and the coinsurance is 80%.

Answer:

Jason will collect $2.4 million from the insurer.

In this scenario, Jason owns three buildings, each with an insurable value of $1 million. The specific limits of insurance for each building are $0.8 million.

Jason suffered a loss of $2.4 million, with $1 million on building 1, $0.9 million on building 2, and $0.5 million on building 3.

To calculate the amount Jason will receive from the insurer, we need to consider the coinsurance clause, which is set at 80%. This means that Jason needs to insure at least 80% of the total insurable value ($1 million) for each building.

Since the limit of insurance for each building is $0.8 million, which is 80% of the total insurable value, Jason has met the coinsurance requirement. Therefore, he will be eligible for the full amount of the loss.

So, Jason will receive $1 million for building 1, $0.9 million for building 2, and $0.5 million for building 3 from the insurer. Adding these amounts together, Jason will collect $2.4 million from the insurer.