How much will an insurance company pay for an $80,000 loss on a building valued at $100,000 insured for $80,000 with an 80% coinsurance clause?

To determine how much an insurance company will pay for the loss of a building valued at $100,000, insured for $80,000, with an 80% coinsurance clause, it's vital to understand how coinsurance works.

In this scenario, the minimum amount of insurance that the policyholder should have is 80% of the property value, which is calculated as follows:

80% of $100,000 equals $80,000.

Since the building is insured for $80,000, it meets the coinsurance requirement of 80%, and therefore, is considered adequately insured. When a loss occurs, such as the $80,000 damage, the policy will provide coverage for the entire insured amount as long as it falls within the limit of the policy, which in this case is $80,000.

Thus, because the insured amount fully covers the assessed loss and the policy adheres to the coinsurance clause requirements, the insurance company will pay the complete loss amount, which is $80,000. This result indicates that, in this situation, the coverage is appropriate and full compensation is applicable. The answer reflects the principles of adequate coverage and the operation of coinsurance provisions effectively.