Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 59

In the following application problems, find the amount of the loss paid by (a) the insurance company and (b) the insured. Assume an 80 % coinsurance clause.
FIRE LOSS The Doll House is located in a building with a replacement cost of $328,500, but Martha Spencer insured it for only $200,000 in order to save money on insurance premiums. An electrical short causes a fire that results in $180,000 in damage.