Q.A warehouse valued at ₹ 40,000 contains goods worth ₹ 2,40,000. The warehouse is insured against fire for ₹ 16,000 and the goods to the extent of 90% of their value. Goods worth ₹ 80,000 are completely destroyed, while the remaining goods are destroyed to 80% of their value due to a fire. The damage to the warehouse is to the extent of ₹ 8,000. Find the total amount that can be claimed under the policy.

Under the average clause the total admissible claim is $\text{₹}1{,}87{,}200$ (goods) $+\;\text{₹}3{,}200$ (warehouse) $=\text{₹}1{,}90{,}400$.

When the sum insured is less than the property's value, the average clause pays

$\text{Claim} = \dfrac{\text{Policy value}}{\text{Property value}}\times \text{Loss}$

Goods. Value $=\text{₹}2{,}40{,}000$; insured to $90\%$, so policy value $= 0.9\times 2{,}40{,}000 = \text{₹}2{,}16{,}000$.

Loss on goods: goods worth $\text{₹}80{,}000$ are fully destroyed; the remaining $\text{₹}2{,}40{,}000-\text{₹}80{,}000 = \text{₹}1{,}60{,}000$ are destroyed to $80\%$, i.e. $0.8\times 1{,}60{,}000 = \text{₹}1{,}28{,}000$.

Total goods loss $= 80{,}000 + 1{,}28{,}000 = \text{₹}2{,}08{,}000$.

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