Suppose that early this year you buy a home valued at $180,000 and purchase $200,000 worth of fire insurance on it.According to the principle of indemnity,what amount of money would the insurer pay you if the home were totally destroyed by fire?
A) $90,000
B) $100,000
C) $180,000
D) $200,000

Question

Quizplus · Accepted Answer

According to the principle of indemnity, the insurer will only pay the actual cash value of the property at the time of loss, which in this case is the value of the home at $180,000. Therefore, the insurer would pay $180,000 to the homeowner in the event of a total loss.

Suppose That Early This Year You Buy a Home Valued