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JAMB Commerce 2015 Paper

Question : 50

Total: 50

Solution:

Concept:

A fire insurance policy with an average clause pays compensation in proportion to the insured amount relative to the actual value of the property.

Explanation:

Use the average clause formula:

\text{Compensation} = \frac{\text{Amount insured}}{\text{Actual value}} \times \text{Actual loss}

For Mr A:

Amount insured

= \mathrm{N}30,000

Actual value

= \mathrm{N}100,000

Actual loss

= \mathrm{N}40,000

Substitute into the formula:

\text{Compensation} = \frac{30,000}{100,000} \times 40,000

= \frac{30,000 \times 40,000}{100,000}

= \frac{1,200,000,000}{100,000} = 12,000

Therefore, Mr A will receive

\mathrm{N}12,000

Answer:

\mathrm{N}12,000

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