Solve the Problem. -Mark Stephens Owns Rental Units with a Replacement Cost of Replacement

question 64

Multiple Choice

Solve the problem.
-Mark Stephens owns rental units with a replacement cost of $290,000 which are insured for $188,500 with an 80% coinsurance clause. There is a fire loss of $20,500. How much will the insurance company pay?

• A)$13,325
• B)$19,988
• C)$20,500
• D)$16,656

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Definitions:

Damage

The loss or harm resulting from the breach of a legal duty or violation of a legal right, often quantified in financial terms for compensation.

Bailor's Negligence

This term relates to situations where the bailor (the owner of property that is loaned to another party, the bailee) fails to exhibit the care or disclosure expected, possibly leading to harm or loss.

Real Property

Land and anything permanently attached to it, such as buildings and trees.

Earth's Crust

The outermost layer of the Earth, composed of solid rocks and minerals, which varies in thickness and composition between the oceanic and continental crust.