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A sole proprietor insured his goods worth N200,000 for half the value. There was a...

Commerce
JAMB 1994

A sole proprietor insured his goods worth N200,000 for half the value. There was a fire accident in which goods valued N80,000 were destroyed. The value of compensation expected from the insurer is

  • A. N40,000
  • B. N80,000
  • C. N100,000
  • D. N200,000
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Correct Answer: Option B
Explanation

The goods were insured for half their value. Since the total value of the goods is N200,000, the insured value is:

Insured value = \(\frac{200,000}{2}\) = N100,000

The value of the goods destroyed in the fire is N80,000

Since the insured value (N100,000) is greater than the loss value (N80,000), the compensation will be equal to the loss value.


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