Question

A person insures his office valued at ₹5,00,000 for 80% of its value. Find the rate of premium if he pays ₹13,000 as premium. Also, find agent’s commission at 11%.

Answer 1

Given, Property value = ₹5,00,000,
Premium = ₹13,000
Rate of commission = 11%
Since the person insures 80% of property value,

∴ Policy value = `(80)/(100) xx 5,00,000` = ₹4,00,000

He pays ₹13,000 as premium

Amount of premium = `"Rate of premium"/(100) xx "policy value"`

∴ 13,000 = `"Rate of perimum"/(100) xx 4,00,000`

∴ Rate of perimum = `(100 xx 13,000)/(4,00,000)` = 3.25%

Agent’s rate of commission is 11% of the premium.

∴ Agent's commission = `(11)/(100) xx 13,000` = ₹1,430

∴ Rate of premium is 3.25% and agent's commission is ₹1,430.