The Hitchcock Clock Company purchases a fire policy with a 90% coinsurance clause and a coverage limit of $150,000. The replacement cost of the building insured is $200,000. The company suffers a $20,000 fire loss. What will the insurance company pay?

a. $12,500

b. $16,667

c. $18,750

d. $20,000

Answer: b. $16,667

Insurance

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