Question

A shop and a godown worth ₹ 1,00,000 and ₹ 2,00,000 respectively were insured through an agent who was paid 12% of the total premium. If the shop was insured for 80% and the godown for 60% of their respective values, find the agent's commission, given that the rate of premium was 0.80% less 20%

Answer 1

Given, Value of shop (property value) = ₹ 1,00,000

Value of godown (property value) = ₹ 2,00,000

Rate of commission = 12%

Shop was insured for 80% of its value.

Policy value = 80% of its property value

= `80/100 xx 1,00,000`

= ₹ 80,000

Godown was insured for 60% of its value.

∴ Policy value of godown = 60% of its property value

= `60/100 xx 2,00,000`

= ₹ 1,20,000

Total policy value = Policy value of shop + Policy value of godown

= 80,000 + 1,20,000

= 2,00,000

Rate of premium is 0.80% less 20%

i.e., 0.80 − 20% of 0.80

= 0.80 − 0.16

= 0.64%

∴ Amount of premium = 0.64% of total policy value

= `0.64/100 xx 2,00,000`

= ₹ 1,280

Commission of agent = 12% of amount of premium

= `12/100 xx 1,280`

= 153.6

∴ Agent’s commission is ₹ 153.6