Amber has a Homeowners 3 policy. The dwelling is insured for $75,000 and the rep

Question

Amber has a Homeowners 3 policy.  The dwelling is insured for $75,000 and the replacement cost of the home is $120,000.  Indicate whether or not each of the following losses is covered.  If possible, determine the dollar amount of the loss that will be covered by Amber's insurance policy.  Clearly identify what section of the policy is controlling and why the event is either covered or not covered.

(a) Amber is on vacation, and a thief breaks into her hotel and steals a suitcase containing jewelry appraised at $1,200, $300 cash, clothes with an actual cash value of $550, and a camera that Amber had borrowed from her neighbor that is worth $500.

(b) Lightning causes a fire in the attic.  Damage to the house is extensive.  The replacement cost of the damaged part of the house is $40,000 and the actual cash value is $36,000.  The fire also damaged some antique jewelry worth $3,000 that Amber paid $500 for several years earlier.  The jewelry is insured on a personal articles policy for $1,500.  Amber is forced to move to a furnished apartment for three months while the house is being repaired.  She spends $1,200 per month for the apartment.

(c) During a windstorm, a picket fence with a replacement cost of $6,400 and an actual cash value of $3,300 is destroyed.  An elm tree was blown over.  It will cost $200 to remove the tree from the property and $50 to replace the tree.

(d) Amber's son is smoking marijuana in the basement of their home.  He falls asleep and starts a fire.  The fire damages furniture with a replacement cost of $4,000 and an actual cash value of $1,300, and ceiling beams supporting the first floor.  The beams will cost $8,000 to replace and have an actual cash value of $6,000.   Until the beams are replaced, the family must move into a hotel.  The hotel costs $1,000 per week.  The family must eat out every meal, costing $700 per week, when their normal grocery bill at home is only $300 per week.  Amber's mortgage payment is $1,700 per month.

Explanation / Answer

a. all the 3 components are covered with the insurance

b. jewelry can be convered under insurance and 100% amount can be recovered

c. the actual cost of $3300 can be recovered under insurance

d. no coverage will comes in this example, because what ever the loss happend is because of the self activities only.

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