A company with stock worth £1,600 suffers £1,300 in flood damage and has a £100 excess. How much will insurers pay?

To determine the amount the insurers will pay for the flood damage incurred by the company, it is essential to consider the total damage amount, any excess amount that the policyholder is responsible for, and the available stock coverage.

The company suffered £1,300 in flood damage, but it has to pay a £100 excess. The excess is the amount the insured must cover before the insurance company pays out. Therefore, the calculation for the claim amount the insurers will pay is as follows:

1. Total damage amount: £1,300
2. Less the excess: £100
3. Amount payable by insurers: £1,300 - £100 = £1,200

However, it is crucial to observe that the amount to be paid out by the insurers cannot exceed the value of the stock, which is £1,600 in this case. Since £1,200 (the amount after applying the excess) is indeed less than the stock value, the calculation can be accepted as valid.

Here, the correct answer amount represents what the insurer will pay after accounting for the excess. The outcome shows that the insurers would pay a total of £1,200, which reflects the amount owed after the excess deduction while within the coverage limit of