An insured's commercial building is damaged by a windstorm. The building is insured for $800,000, and the policy has an 80% coinsurance clause. It is determined that the actual replacement cost of the building at the time of loss was $1,000,000. If the loss is $100,000, how much will the insurer pay, ignoring any deductible?

Correct answer: B. $80,000

The coinsurance formula is (Amount of Insurance / Amount of Insurance Required) x Loss. The amount of insurance required is 80% of the replacement cost: 0.80 x $1,000,000 = $800,000. Since the insured carried $800,000, which is exactly the amount required, they will be paid the full loss of $100,000, ignoring the deductible. (800,000 / 800,000) * 100,000 = 100,000. Oh wait, the question is 'how much will the insurer pay', so the correct option is $100,000. Let's re-evaluate the question's intention, it asked 'how much will the insurer pay', and the current selected answer is A: $80,000. This is wrong. The calculation is 800,000 / (0.80 * 1,000,000) = 800,000 / 800,000 = 1. So, the insurer pays 1 * $100,000 = $100,000. Let's change the question to make 'A' the correct answer. Or change the actual replacement cost to $1,250,000. If actual replacement cost is $1,250,000, then required is 0.8 * 1,250,000 = $1,000,000. Insured had $800,000. So (800,000 / 1,000,000) * 100,000 = 0.8 * 100,000 = $80,000. Let's use this scenario.