Question

A building is insured for 75% of its value.
The annual premium at 0.70 per cent
amounts to Rs.2625. If the building is
damaged to the extent of 60% due to fire,
how much can be claimed under the policy?​

Answer 1

Given:

A building is insured for 75% of its value. The annual premium at 0.70 per cent amounts to Rs.2625.

To find:

If the building is damaged to the extent of 60% due to fire, how much can be claimed under the policy?​

Solution:

From given, let us consider,

"x" be the property value.

∴ Policy value = 0.75 x  

(∵ A building is insured for 75% of its value)

Rate of premium = 0.7 %

⇒ 0.7/100 × 0.75 x = 2625

(∵ The annual premium at 0.70 per cent amounts to Rs.2625. )

x = (2625 × 100)/(0.7 × 0.75)

∴ x = 500000

∴ Policy value = 0.75 x  = 0.75 × 500000 = 375000

Loss = 60%

= 60/100 × 500000 = 300000

Claim = insured value/propery value × loss

= 375000/500000 × 300000

= 225000

∴ Claim under the policy is Rs. 225000