If a property valued at Php 50,000 is insured for Php 100,000, what is the liability in case of a total loss?

When a property valued at Php 50,000 is insured for Php 100,000 and a total loss occurs, the liability of the insurer will be based on the actual value of the property at the time of loss. The principle of indemnity in insurance suggests that the insured should be compensated for their actual loss and not profit from the situation.

In this scenario, since the property was insured for an amount exceeding its actual value, the liability limit comes into play, which is the actual cash value of the property at the time of loss. Therefore, in the event of a total loss, the insurer would pay out the value of the property, which is Php 50,000, aligning with the principle of indemnity.

Thus, the correct answer reflects the idea that claim settlements are limited to the value of the property insured, ensuring that the insured does not receive more than what the property was worth.