Question

A car valued at Rs. 4,00,000 is insured for Rs. 2,50,000. The rate of premium is 5% less 20%. How much loss does the owner bear including the premium if value of the car is reduced to 60% of its original value ?

Answer 1

Given :

Car value = Rs. 4,00,000
Policy value = Rs. 2,50,000
Rate of premium is 5% less 20%

Premium = `5/100 xx 2,50,000`
Premium = Rs. 12500
less 20% = Rs. `20/100 xx 12,500` = Rs. 2,500

Net Premium = Rs. 12500 - 2500 = Rs. 10,000

Loss = `40/100 xx 4,00,000` = Rs. 1,60,000

Claim = loss x `"Policy value"/"Property value"`

= `160,000 xx [250000]/[400000]`
= Rs. 1,00,000

Also, Premium = Rate of premium x Policy value 

= 4% of 250,000

= `4/100 xx 250,000`

= Rs. 10,000

Net loss of owner = loss - claim + Net premium
= 160000 - 100000 + 10000
= Rs. 70,000