Under a value reporting form, an insured reports $200,000 of stock at a location where the actual value on the reporting date was $250,000. A $100,000 covered loss later occurs there. The insurer pays:
Explanation
The full reporting condition limits recovery to the proportion the last reported value bears to the value that should have been reported: $200,000 / $250,000 = 80 percent, and 80 percent of $100,000 is $80,000. Reporting forms exist so a business with a heavy peak season pays premium on the values it actually holds month by month instead of insuring the seasonal high all year. Under-reporting buys the cheaper premium and the smaller recovery with it.
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