If Mr a Takes a Fire Insurance Policy With an Average Clause, His Compensation Will Be

(begin{array}{c|c}
text{Name} & text{Insure amount} & text{Actual value} & text{Actual loss} \
hline
text{Mr A} & 30,000 & 100,000 & 40,000 \
hline
text{Mr B} & 40,000 & 120,000 & 50,000 \
hline
text{Mr C} & 50,000 & 15,000 & 70,000 \
end{array})

If Mr A takes a fire insurance policy with an average clause, his compensation will be

Correct Answer: Option C

Explanation

Since the policy is with average clause the formula used in calculating his compensation is
(frac{text{Amount insured x total actual loss}} {text{Total actual value of property}})
By this formula the compensation will be
Amount insured = N30,000
Amount loss = N40,000
Actual Value = N100,000
=(frac{30,000 times 40, 000}{100,000})
= (frac{1200000000}{100,000}) = 12,000