David owns a commercial building with a replacement cost of $4 million
David owns a commercial building with a replacement cost of $4 million. The building is insured on a replacement cost basis for $2.4 million under a fire insurance policy that has an 80 percent coinsurance clause.
How much will David collect if the building sustains a covered fire loss with a replacement cost of $80,000?
A) $50,000
B) $60,000
C) $66,667
D) $80,000
ANSWER
Answer: B
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