2o18 Cengage NOW I Assignnent I Print over Chapter 10 Financial Planning Exercis

Question

2o18 Cengage NOW I Assignnent I Print over Chapter 10 Financial Planning Exercise 2 Last year, Paul and Joanna Stillman bought a home with a dwelling replacement value of $150,000 and insured (via an HO-5 policy) for $134,000. The policy reimburses for actual cash value and has a $250 deductible, standard imits for coverage C items) and no scheduled property. Recently, burglars broke into the house and stole a 2-year- television set with a turrent replacement value of $1,000 and an estimated useful life of 10 years They also took ewelry valued at $2,800 and silver flatware valued at $4,200. a. If the Stillman. policyhas an 80% co-insurance clause, do they have enough insurance? 4,peo 34,000-13 b, Assuming a 50% coverage C limit, calculate how much the Stillmans would receive if they filed a daim for the stolen items. Round the answer to two decimal places. so, 20%?ISO,000 =

Explanation / Answer

Answer :

Part a :

For property with a replacement value of $150,000, an 80% co-insurance requirement means that the Paul and Stillman needs to have coverage of at least $120,000. They have $134,000 therefore they have enough insurance at this time.

Part B :

An HO-5 provides comprehensive coverage on the real and personal property. Coverage C refers to personal property and the policy states that the coverage is actual cash value with a $250 deductible. Standard limits provide for 50% of total coverage limit for personal property, which in this case is 50% * $134,000 or $67,000. Remember that homeowner’s policies usually specify limits for certain types of personal property included under the coverage C category. These coverage limits are within the total dollar amount of coverage C and in no way act to increase that total. Loss from jewelry theft is limited to $1,000, and payment for theft of silverware, goldware, and pewterware has a $2,500 limit.

The Item Lost and there values are :

Two Year old telecision $1000 Replacement value less 2/10 or 200 yield actual cash value of $800

Jewelary $2800 limited to $1000

Silver Flatware $4200 limited to $2500

Deductible amount is $250

Amount to be recived from Insure=ance $4050

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