Last year, Brett and Amber Walsh bought a home with a dwelling replacement value
ID: 2788382 • Letter: L
Question
Last year, Brett and Amber Walsh bought a home with a dwelling replacement value of $300,000 and insured it (via an HO-5 policy) for $243,000. The policy reimburses for actual cash value and has a $500 deductible, standard limits for coverage C items, and no scheduled property. Recently, burglars broke into the house and stole a 4-year-old television set with a current replacement value of $900 and an estimated useful life of 6 years. They also took jewelry valued at $1,800 and silver flatware valued at $3,700.
1.1 If the Walsh's policy has an 80% co-insurance clause, do they have enough insurance?
1.2 Assuming a 50% coverage C limit, calculate how much the Walshes would receive if they filed a claim for the stolen items. Do not round intermediate calculations. Round the answer to two decimal places.
Explanation / Answer
a) For a property of value $300000, a 80% coinsurance means that they need to have a coverage of $240000 ($300,000 × 80%). They have a coverage of $243000, which is enough.
b) Coverage C means coverage for personal property, and the policy states that the coverage is actual cash value with a $500 deductible. Standard limit is 50% of the total coverage of $243000 which equals to $121,500.
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 $1000 limit and payment for theft of silverware, goldware, and pewterware has a $2500 limit. Considering these, we have -
4 year old television $900 replacement value less 4/6 or $600 gives us actual cash value of $300 Jewellery $1800 limited $1000 Silver Flatware $3700 limited to $2500 Total cash value after applying limits $3800 (300 + 1000 + 2500) Deductible Amount $500 Amount to be received from insurance $3200Related Questions
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