Question

A house valued at INR 8,00,000 is insured at 75% of its value. If the rate of premium is 0.80%, find the premium paid by the owner of the house. If agent's commission is 9% of the premium, find agent's commission.

Hint:

Insurance calculations follow a clear sequence:
1. Find the {Policy Value} (the amount insured).
2. Calculate the {Premium} based on that value.
3. Calculate the {Commission} based on the premium.
Always base each calculation on the result of the previous step.

Answer 1

Step 1: Calculate the insured value of the house.
The house is valued at INR 8,00,000 and is insured for 75% of its value. \[ \text{Insured Value} = 8,00,000 \times 75% = 8,00,000 \times \frac{75}{100} = \text{INR } 6,00,000 \] Step 2: Calculate the premium paid.
The rate of premium is 0.80% of the insured value. \[ \text{Premium} = 6,00,000 \times 0.80% = 6,00,000 \times \frac{0.80}{100} = 6,000 \times 0.8 = \text{INR } 4,800 \] Step 3: Calculate the agent's commission.
The agent's commission is 9% of the premium. \[ \text{Agent's Commission} = 4,800 \times 9% = 4,800 \times \frac{9}{100} = 48 \times 9 = \text{INR } 432 \] So, the premium paid is INR 4,800 and the agent's commission is INR 432.