A Building is insured for $200,000 with commercial property insurance policy.
A policy has an 80% coinsurance clause.
A building had a flood and incurred a $50,000 loss.
A replacement cost of the building at the time of the flood was $500,000.
Show work, calculations, and small explanation
1. What is the insurer’s liability for the loss?
2. If the building carried a $500,000 property insurance policy whilst incurring the loss, how much would the building collect?