An insured on a reporting form last reported $200,000 of stock when the true value on that date was $250,000. A covered loss of $50,000 follows. What does the full reporting condition allow?
Explanation
A reporting form charges premium on the values the insured reports at set intervals, which suits a business whose inventory swings through the year. The full reporting condition pays only the proportion the last reported value bears to the actual value on that date: $200,000 divided by $250,000 is 80%, and 80% of $50,000 is $40,000. Paying the whole $50,000 would reward the under-report, and the penalty is proportional rather than a flat cut.
This topic, taught in full in the California Property & Casualty Broker-Agent guide. California Property & Casualty Broker-Agent Study Guide — 2026 Edition — PDF + EPUB, $24.99 · 14-day refund →
Practice all 531 questions free — no signup required.
Own the complete California Property & Casualty Broker-Agent guide — PDF + EPUB, $24.99 →
Related questions on this topic
- Business income coverage is written on an actual loss sustained basis. That means the insurer pays:
- After a covered fire, a print shop rents temporary space for $12,000 a month for three months and rents replacement presses for $9,000 so it can keep filling orders. What is its extra expense claim?
- An insured elects to exclude ordinary payroll from its business income coverage. During a shutdown the policy will then not pay:
- A retailer's business personal property limit is $300,000, raised to $700,000 for September through December by a peak season endorsement. A covered fire on November 10 destroys $560,000 of stock. The deductible is $5,000. How much is paid?
- For the vacancy condition in a commercial property policy, a building owned by the insured counts as vacant when:
- Why is equipment breakdown coverage bought separately from the commercial property policy?
Last reviewed: · editorial process