Question

The rate of premium is 2% and other expenses are 0.75%. A cargo worth ₹ 3,50,100 is to be insured so that all its value and the cost of insurance will be recovered in the event of total loss.

Answer 1

Property value = 3,50,100

Let insured value = a.

∴ premium = `(2"a")/100`

Other expenses = 0.75% of a

`= (75 "a")/(10,000)`

∴ Insured value = Property value + Premium + Other expenses

∴ a = 3,50,100 + `(2"a")/100 + (75 "a")/(10,000)`

∴ a = 3,50,100 + `(2"a" xx 100)/(100 xx 100) + (75 "a")/(10,000)` ....(Multiplied by 100)

∴ a = 3,50,100 + `(200"a")/10000 + (75 "a")/(10,000)`  

∴ a = 3,50,100 + `(275 "a")/(10,000)`

∴ a - `(275 "a")/(10,000)` = 3,50,100

∴ `(10,000 "a" - 275 "a")/(10,000) = 3,50,100`

∴ `(9,725 "a")/(10,000)` = 3,50,100

∴ a = `3,50,100 xx (10,000)/(9,725)`

∴ a = 3,60,000