<table class='tbn'><tbody><tr><td> <b>NAME</b> </td><td> <b>INSUREDAMOUNT(₦)</b> </td><td> <b>ACTUALVALUE(₦)</b> </td><td> <b>ACTUALLOSS(₦)</b> </td></tr><tr><td> Mr. PMr. KMr. R </td><td> 25,00030,00040,000 </td><td> 100,000120,000150,000 </td><td> 30,00040,00050,000 </td></tr></tbody></table><br/>Use the table above to answer this question<br/>If Mr. P takes a fire insurance policy with average clause, his compensation will be ____________
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Correct Answer: Option A
Explanation:
Under the average clause, the insurer pays only a proportion of the loss. The proportion is the insured amount divided by the actual value of the property.<br/><br/>For Mr. P, the insured amount is ₦25,000, the actual value is ₦100,000, and the actual loss is ₦30,000.<br/><br/>The formula for the compensation is:<br/>\[<br/>\text{Compensation} = \left( \frac{\text{Insured Amount}}{\text{Actual Value}} \right) \times \text{Actual Loss}<br/>\]<br/><br/>\[<br/>\text{Compensation} = \left( \frac{25,000}{100,000} \right) \times 30,000<br/>\]<br/><br/>\[<br/>\text{Compensation} = 0.25 \times 30,000 = ₦7,500<br/>\]<br/><br/>The compensation payable to Mr. P is ₦7,500.
Under the average clause, the insurer pays only a proportion of the loss. The proportion is the insured amount divided by the actual value of the property.<br/><br/>For Mr. P, the insured amount is ₦25,000, the actual value is ₦100,000, and the actual loss is ₦30,000.<br/><br/>The formula for the compensation is:<br/>\[<br/>\text{Compensation} = \left( \frac{\text{Insured Amount}}{\text{Actual Value}} \right) \times \text{Actual Loss}<br/>\]<br/><br/>\[<br/>\text{Compensation} = \left( \frac{25,000}{100,000} \right) \times 30,000<br/>\]<br/><br/>\[<br/>\text{Compensation} = 0.25 \times 30,000 = ₦7,500<br/>\]<br/><br/>The compensation payable to Mr. P is ₦7,500.