- Jessie Jimenez
Welcome to Cashtoons's new look! And now it's searchable!
Test it out by answering this question:
You have a homeowner's insurance plan with a coinsurance clause that kicks in if you are not insured for at least 80% of the value of your home. You bought your home 4 years ago for $440,000 and purchased insurance at $352,000, which is 80% of the value of your house when you bought it. Now your home is worth $530,000. How much will your insurance pay if disaster strikes at the price tag of 400,000?
Not sure? Enter Coinsurance in the search bar. We'll give you a second and some space, so you don't peek at the answer.
Okay, here's the answer: 352,000/424,000 * 400,000 = Your insurance will pay $332,075 (about $20,000 less than you were expecting.)
Come back next week for more on insurance!