From: john boyle 
Newsgroups: uk.finance
Subject: Re: Contents Insurance valuation
Date: Fri, 24 Feb 2006 16:14:00 +0000

In message , Ronald 
Raygun  writes
>john boyle wrote:
>
>> In message , Ronald
>> Raygun  writes
>>>john boyle wrote:
>>>> In message <1140779167.283294.79660@z34g2000cwc.googlegroups.com>,
>>>> alfi286@aol.com writes
>>>>>If the house burnt down would I
>>>>>get this full amount as payment for the stuff I lost?
>>>>
>>>> If the replacement costs exceed £12500 then what you would get =
>>>>
>>>> 12500/actual total replacement cost
>>>
>>>I think you mean (£12500)^2/(replacement cost).
>>
>> No. If the total replacement cost was £25,000 then he would get half his
>> claim.
>
>Indeed, but in the stated scenario of the house burning down, all his
>contents would be destroyed and so his claim would be for everything.

Yes, but assuming 'new goods replace old' cover he would only get half 
the amount claimed. In fact he would only get half the amount claimed 
for ANY claim, irrespective of the total amount claimed.
>
>My point was that you gave a ratio, not an amount.

Yes, it is correct. It will always be amount paid out by insco=(amount 
of claim*amount of cover)/(actual total value of replacing everything in 
one go)
> You gave only
>Limit/(Replacement Value of Everything)   whereas it should have been
>(Size of Claim)*Limit/(Replacement Value of Everything).
>

Yes I didnt make it clear. BTW that raising to the power of 2 bit of 
yours confused me as well!
-- 
John Boyle