NAME INSURED AMOUNT(N) ACTUAL VALUE(N) ACTUAL LOSS(N) Mr. P Mr. K Mr. R 25,000 30,000 40,000 100,000 120,000 150,000 30,000 40,000 50,000 Use the table abov...

Use the table above to answer questions 27 and 28

If Mr. P takes a fire insurance policy with average clause, his compensation will be

Answer Details

Under an average clause in insurance, if the value of the insured property is less than the insured amount, the policyholder will only receive a proportional compensation based on the actual value of the property. For Mr. P, the insured amount is N25,000 and the actual value is N100,000. So, the compensation will be (N25,000 / N100,000) * N30,000 = N7,500.