If a $100,000 house has an 80% coinsurance requirement and suffers $40,000 in damage, how much can the owner collect with $60,000 coverage?

To determine the amount the owner can collect for the damages, we need to apply the principle of coinsurance in property insurance. The key factor here is the coinsurance requirement of 80% on the $100,000 house. This means that the homeowner is expected to carry insurance coverage equal to at least 80% of the home's value.

1. Calculate the Minimum Required Coverage:

The 80% coinsurance requirement on a $100,000 house means the minimum insurance coverage that should be maintained is $80,000 (which is 80% of $100,000).

2. Determine Actual Coverage:

The homeowner has $60,000 in coverage, which is less than the required $80,000.

3. Insurance Payment Formula:

When a claim occurs, the formula used to determine the amount payable by the insurance company is:

[

\text{Amount Paid} = \text{(Insurance Carried / Insurance Required)} \times \text{Loss}

]

In this case, the calculation works out as follows:

[

\text{Amount Paid} = \left(\frac{60,000}{80,000}\