A Sole proprietor insured his goods worth N200,000 for half the value. There was a...
A Sole proprietor insured his goods worth N200,000 for half the value. There was a fire incident in which goods valued N80, 000 were destroyed. The value of compensation expected from the insurer is
- A) N440,000
- B) N1,480,000
- C) N200,000
- D) N100,000
Correct Answer: D) N100,000
Explanation
A sole proprietor, who is a person who owns and runs a business alone, insured his goods worth N200,000 for half the value. This means that he only insured them for N100,000, which is half of their actual value. Later, there was a fire incident in which goods valued at N80,000 were destroyed. The question is asking how much compensation the sole proprietor can expect to receive from the insurer for the loss of the N80,000 worth of goods.To solve this problem, we need to know that the insurer will only compensate the sole proprietor for the amount of goods that were insured. Since the goods were insured for N100,000, the maximum compensation that the sole proprietor can expect to receive is N100,000. This means that Option D is the closest to the correct answer.
It's important to note that the other options are not correct because they are either too high or too low. Option A is much higher than the maximum amount that the sole proprietor can receive, Option B is even higher than Option A, and Option C is the actual value of the goods that were insured, not the amount of compensation that the sole proprietor can expect to receive.
Overall, the correct answer is Option D: N100,000.