What is the maximum payment the insurers will make after the storm damage if the mill should have been insured for £1,000,000?

In this scenario, the concept of underinsurance comes into play, which is pivotal in determining the maximum payment that insurers will make after the storm damage. If the mill should have been insured for £1,000,000 but was not, the calculation of the payout will depend on the actual amount of insurance coverage and the conditions set forth in the insurance policy.

When property is underinsured, any claim made for damages is typically paid on a proportional basis. This means that if the actual coverage was less than the amount that should have been insured, the insurer will adjust the payout accordingly to reflect the proportion of the coverage taken out relative to the true value.

For example, if the mill was insured for £500,000 instead of the necessary £1,000,000, the ratio of coverage would be 50%. This would imply that after the storm damage, the insurer would pay 50% of the claim amount. If the damages incurred were assessed at £400,000, the payout would be calculated as 50% of that sum, totaling £200,000.

Therefore, if the question indicates that the mill was insured for £500,000 and suffered damages that were calculated at £400,000, the maximum payment from the insurer