Last year, Paul and Joanna Stillman bought a home with a dwelling replacement va
ID: 1109111 • Letter: L
Question
Last year, Paul and Joanna Stillman bought a home
with a dwelling replacement value of $160,000 and insured it (via an HO-5 policy) for $142,000. The policy reimburses for actual cash value and has a $1,000 deductible, standard limits for coverage C items, and no scheduled property. Recently, burglars broke into the house and stole a 2-year-old television set with a current replacement value of $1,200 and an estimated useful life of 6 years. They also took jewelry valued at $1,700 and silver flatware valued at $3,700. If the Stillman' policy has an 80% co-insurance clause, do they have enough insurance?
( This is my question) ------------------ Assuming a 50% coverage C limit, calculate how much the Stillmans would receive if they filed a claim for the stolen items. Round the answer to two decimal places. $
Explanation / Answer
a) For a property of value $160000, a 80% coinsurance means that they need to have a coverage of $128000 (160000 × 80%). They have a coverage of $142000, which is enough.
b) Coverage C means coverage for personal property and the policy states that the coverage is actual cash value with a $1000 deductible. Standard limit is 50% of the total coverage of $142000 which equals to $71,000.
Deductible on teh policy = $1000
Loss from jewellery = $ 1700
Loss from jewellery is limited to = $1000
Loss of Silver flatware = $3700
Loss from Silver flatware is limited to = $2500
Replacement Value of TV = $1200
Age of the TV = 2 years
Expected total age of TV = 8 years
Remaining life of teh TV = 6years = 3/4
Actual cash value of TV = 1200 * 3/4 = $900
2 year old television $1200 replacement value less 2/8 or $300 yields actual cash value of $900 Jewellery $2900 limited $1000 Silver Flatware $4200 limited to $2500 Total cash value after applying limits $4400 Deductible Amount $1000 Amount to be received from insurance $3400Related Questions
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