How Much of Fire Loss Will Be Covered? Toula and Ian Miller of Gainesville, Flor

Question

How Much of Fire Loss Will Be Covered? Toula and Ian Miller of Gainesville, Florida, recently suffered a fire at their home. The fire, which began in a crawl space at the back of the house, caused $51,000 of damage to the dwelling itself. Their garage, valued at $22,000, was totally destroyed but did not contain a car at the time of the fire. Replacement of the Millers' personal property damaged in the home and garage amounted to $25,000. In addition, $350 in cash and a stamp collection valued at $3,235 were destroyed. While the damage was being repaired, the Millers stayed in a motel for one week and spent $1,310 on food and lodging. The house had a value of $196,000 and was insured for $151,000 under an HO-3 policy with a $250 deductible. Use Table 10-1 to answer the following questions. (Hint: You must first determine whether the Millers have adequate dwelling replacement coverage and, if not, what percentage of the necessary 80 percent coverage they do have. The resulting answer will determine the percentage of the loss to the dwelling covered, and consequently the amount to be reimbursed by the insurance company.) Assuming that the deductible was applied to the damage to the dwelling, calculate the amount covered by insurance and the amount that the Millers must pay for each loss listed: the dwelling, the garage, the cash and stamp collection, and the extra living expenses.

Enter all amounts as positive numbers. Leave no cells blank. Enter "0" wherever required. Round your answers to the nearest dollar

b. How much of the amount of the personal property loss would be covered by the insurance policy? Assume that the Miller's policy includes contents replacement-cost protection. Enter all amounts as positive numbers. Leave no cells blank. Enter "0" wherever required. Round your answers to the nearest dollar.

$____

paid for by the Millers? $_______

C. Assuming that they have contents replacement-cost protection on the personal property, what amount and percentage of the total loss must be paid by the Millers? Enter the values as positive numbers. Round your answer for amount to the nearest dollar and answer for percentage to two decimal places.

amount: $______

percentage: ______%

amount covered by insurance amount millers must pay the dwelling $ $ the garage $ $ the cash $ $ stamp collection $ $ the extra living expenses $ $ Jalle 10-1 Summary of Homeowner's Insurance Policies HO-1 (Basic Form) Perils 1-4, 6, 8-12 HO-2 (Broad Form) Perils 1-16 HO-3 (Special Form) All perils except those Perils covered (descriptions are given below) specifically excluded for buildings, perils 1-16 on personal property (does not include glass breakage) House and any other Amount based on Amount based on Amount based on attached buildings replacement cost, replacement cost, minimum $20,000 replacement cost, minimum $15,000 the home (minimum) the home, $500 maximum minimum $15,000 the home (minimum) the home, $500 maximum Detached buildings 10 percent of insurance on10 percent of insurance on 10 percent of insurance on (appurtenant structures) the home (minimum) Trees, shrubs, plants, etc. 5 percent of insurance on 5 percent of insurance on 5 percent of insurance on the home, $500 maximum per item 50-70 percent of insurance on 20 percent of insurance on $1,000 Personal property 50-70 percent of insurance on 50-70 percent of insurance on the home (minimum) the home (minimum) the home (minimum) Loss of use and/or additional 10 percent of insurance on 20 percent of insurance on the home the home living expense Credit card, forgery the home counterfeit money Liability coverage/limits Special limits of liability (for all policies) Comprehensive personal $300,000 For the following classes of personal property, special limits apply on a per-occurrence basis (e.g., per fire or theft) money, coins, bank notes, precious metals (gold, silver, etc.) $200; computers, $5,000; securities, deeds, stocks bonds, tickets, stamps, $1,000; watercraft and trailers including furnishings, equipment, and outboard motors, $1,000; trailers other than for watercraft, $1,000; jewelry, watches, furs, $1,000; silverware, goldware, etc., $2,500; guns, $2,000 No-fault medical payments No-fault property damage $1,000 $500 List of perils covered 10. Riot or Civil Commotion 11. Damage caused by Aircraft 12. Vandalism or Malicious Mischief 13. Damage due to weight of Ice, Snow, or Sleet 14. Sudden & Accidental Tearing Apart, Cracking, Burning, or 2. Fire or Lightning 3. Explosion 4. Smoke 5. Freezing 6. Vehicles 7. Falling Objects 8. Volcanic Eruption 9. Windstorm or Hail 15. Sudden & Accidental Damage from Artificially Generated Electric Current 16. Accidental Discharge or Overflow of Water from Plumbing Air conditioning etc

Explanation / Answer

b- Personal property damaged= $25,00

Maximum insurance coverage= 50% of home insurance= 50% of $151,000= $75,500

personal property damaged paid by insurance company= $25,000 and paid by miller= 0

c- There will be 100% replacement of the personal property damaged by the insurance.

Amount Covered by insurance amount paid by Miller the dwelling 50,750 250 the garage 22.000 0 The cash 200 150 Stamp Collection 1000 2235 Extra living expenses 1310

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