CAS Exam 5 Fall 2016, Question 14

Study guide: Exam 5

An insured purchases a 400,000 policy on a property valued at 500,000.

• The coinsurance requirement for the policy is 90% of property value.
• No deductible applies.

Part a (0.25 points)

Calculate the coinsurance penalty for a $300,000 loss.

Part b (0.25 points)

Calculate the maximum coinsurance penalty.

Part c (0.25 points)

Calculate the coinsurance apportionment ratio, assuming the property is valued at 425,000 instead of 500,000.

Part d (0.5 points)

Briefly describe two issues associated with underinsured properties.

Answer this question and see the worked solution

Concepts tested

• Coinsurance
• Coinsurance Rating

More questions from this set

• CAS Exam 5 Fall 2016, Question 13
• CAS Exam 5 Fall 2016, Question 15