A sewing machine valued at $20 000 was insured for$ 15 000 against theft. The machine was later stolen. Under the principle of average, what amount of compensation did the owner receive?

Model answer

$15 000

Also accepted: 15000, $15000, 15 000

Explanation: The machine was under-insured, but the sum insured (

15 000) was less than the value, so compensation was capped at the

15 000 sum insured.

Derived from ZIMSEC Commerce 7103/2 Paper 2, June 2004, Q9

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