Graduate

04-08-2004, 04:44 PM

2003 Exam, Q40 b)

We're to find "Additional Insurance" that would've been required for full indemnification of loss by the insurer.

Policy1: I=46,875

Policy2: I=120,000

Policy3: I=375,000

What I'm doing is that the "Additional Insurance" should be equal to the Difference b/w "Loss amount" and the "Indemnity paid by insurer".Doing this, I get the correct answers for Policies 2 and3, but incorrect answer for policy1 (my answer was 3,125 while the correct is 10,000).

I know the above logic is in-correct, there is probably another condition applicable but I don't know what? What am I missing?

Thanks for your time in advance.

We're to find "Additional Insurance" that would've been required for full indemnification of loss by the insurer.

Policy1: I=46,875

Policy2: I=120,000

Policy3: I=375,000

What I'm doing is that the "Additional Insurance" should be equal to the Difference b/w "Loss amount" and the "Indemnity paid by insurer".Doing this, I get the correct answers for Policies 2 and3, but incorrect answer for policy1 (my answer was 3,125 while the correct is 10,000).

I know the above logic is in-correct, there is probably another condition applicable but I don't know what? What am I missing?

Thanks for your time in advance.