Question

Find the premium on a property worth ₹ 25,00,000 at 3% if (i) the property is fully insured, (ii) the property is insured for 80% of its value.

Answer 1

Given, Property value = ₹ 25,00,000,

Rate of premium = 3%

(i) When a property is fully insured,

Here, Property value = Policy value

∴ Policy value = ₹ 25,00,000

Amount of premium = 3% of policy value

= `(3)/(100) xx 25,00,000`

= ₹ 75,000

∴ Amount of premium is ₹ 75,000.

(ii) When a property is insured to 80% of its value.

Here, Policy value = 80% of property value

= `(80)/(100) xx 25, 00, 000` 

= ₹ 20,00,000

Amount of premium = 3% of policy value

= `(3)/(100) xx 20,00,000`

= ₹ 60, 000
∴ Amount of premium is ₹ 60,000.