Assume That the Physical Property of a Business Is Valued

Multiple Choice

Assume that the physical property of a business is valued at R5 000 000.The company's commercial property policy contains a coinsurance clause with a stated percentage of 80 per cent.The company insures the property for R3 000 000 (75 per cent of the specified minimum) .The company incurs a fire loss of R2 000 000.How much of the loss will the insurance company pay for?

A) R0
B) R1 500 000
C) R2 000 000
D) R1 000 000