If an Electrician business has a contents total of 140k and a 90% co-insurance clause but reports only 120k, what is the claim payout percentage?

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To determine the claim payout percentage in this scenario, we first need to understand the concept of co-insurance, which is a clause in insurance policies that requires the insured to carry coverage equal to a specified percentage of the value of the property.

In this case, the electrician business has contents valued at $140,000 and a co-insurance clause of 90%. This means that for the business to be fully covered, it should have at least 90% of the $140,000 in coverage, which amounts to $126,000 (90% of $140,000).

However, the business only reports coverage of $120,000.

To calculate the claim payout percentage, we use the formula:

Claim Payout = (Reported Coverage / Required Coverage) * Loss Amount

Assuming there is a loss equal to the $120,000 reported, we can calculate the payout percentage based on the co-insurance requirement:

Required Coverage = 90% of $140,000 = $126,000

The formula for the payout percentage becomes:

Claim Payout Percentage = (Reported Coverage / Required Coverage) * 100

Plugging in the values:

Claim Payout Percentage = ($120,000 / $126,000) *