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JAMB Commerce 2021 Question 27

Question 27

Insurance

Use the table below to answer questions 27 and 28.
Name | Insured Amount (₦) | Actual Value (₦) | Actual Loss (₦)
Mr. P | 25,000 | 100,000 | 30,000
Mr. K | 30,000 | 120,000 | 40,000
Mr. R | 40,000 | 150,000 | 50,000

If Mr. P takes a fire insurance policy with average clause, his compensation will be

  1. A.₦7,500
  2. B.₦5,000
  3. C.₦70,000
  4. D.₦7,500
Show the answer and explanation

Answer: A (₦7,500)

Explanation

Under average, compensation = (sum insured ÷ actual value) × loss = 25,000/100,000 × ₦30,000 = ₦7,500.