Question

Q20) Stock worth Rs.375000 was insured for Rs.225000. Stock worth
Rs.150000 was burnt completely due to fire and the balance was
reduced to 75% of its value. What sum can be claimed under the
policy?

a) Rs.161250 b) Rs.191250 c) 200000 d) 165400.

Answer 1

Given :  Stock worth Rs.375000 was insured for Rs.225000.

Stock worth Rs.150000 was burnt completely due to fire and the balance was reduced to 75% of its value.

To Find : What sum can be claimed under the policy

Solution:

Stock worth Rs.375000  

Burnt = 150000  Rs

Balance = 375000 - 150000  = 225000  Rs

Balance was reduced to 75% of its value.

Hence remaining value = (75/100)225000 = 168750 Rs

So Total Loss = Original Value - Remaining Value

= 375000 - 168750

= 206250  Rs

Claim  =  (policy value / Property value ) * loss

=> claim =  (225000/ 375000 ) *  206250

=> claim = (3/ 5 ) *  206250

=> claim = 3 *  41250

=> claim = 123750  Rs

None of the given option matches:

Claim of  Rs.191250 will match if question is  balance was reduced by 75%

Stock worth Rs.375000  

Burnt loss = 150000  Rs

Balance = 375000 - 150000  = 225000  Rs

Balance was reduced by 75% of its value.

Value reduction loss = (75/100)225000 = 168750 Rs

Total loss = 150000 +  168750 =  318750  Rs

Claim  =  (policy value / Property value ) * loss

=> claim =  (225000/ 375000 ) *  318750

=> claim = (3/ 5 ) *  318750

=> claim = 3 *  63750

=> claim = 191250  Rs

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