A dwelling costing $250,000 to replace is insured on a broad form for $150,000, under a loss settlement condition asking for 80%. A $40,000 building loss is settled at:

Giải thích

The condition asks for insurance of at least 80% of $250,000, which is $200,000. Only $150,000 was carried, so the replacement cost settlement is cut to the ratio of $150,000 to $200,000, or 75%, and 75% of the $40,000 loss is $30,000. The insured absorbs the difference for carrying less than the form asks, with actual cash value available as the alternative measure.