If a house valued at $100,000 is insured for $80,000 and it burns down requiring $15,000 for debris removal, what will the insurance company payout?

To determine the payout from the insurance company in this scenario, it is essential to understand how insurance coverage works, particularly with a policy that has specific limits.

The house is valued at $100,000 but is insured for $80,000. In the event of a total loss, such as a complete burn down, the insurance will cover the actual value of the structure up to the policy limit, which in this case is $80,000.

Additionally, the costs associated with debris removal after a fire can also be a separate consideration. Here, the debris removal costs are $15,000. Many insurance policies include coverage for debris removal within the overall limit or allow an extension beyond the policy limit for debris removal costs.

In this scenario, if the policy allows for the debris removal cost to be added to the policy limit, the total payout from the insurance company would be the insured amount of $80,000 plus the $15,000 for debris removal, resulting in a total of $95,000. This encompasses both the coverage for the structure and the additional coverage for the removal of debris, reflecting the necessary expenses for restoring the site of the loss.

Thus, the insurance company would pay out a total of $95,000