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?

Giải thích

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.