Evens,

This is a coinsurance question.  The insured was "under-insured" at the time of the loss, therefore they will only receive a partial payment for the loss.

If the insured had purchased coverage at a minimum of 80% of the value of the property, they would receive $5000 less the $500 deductible, or $4500.

Since the property was under-insured, you must work the coinsurance formula to determine the partial amount payable for this loss.  Please use this formula to determine the amount payable and let me know your answer.  The coinsurance formula is on page 27 in the state manual. If you have any problem working this formula, please email me at bradburn@oltraining.com.

Jan