Assume James owns a HO3 policy with the following limits: Coverage A: $120,000 Coverage B: $ 12,000 Coverage C: $ 60,000 Coverage D: $ 36,000 Coverage E: $100,000 Coverage F: $ 5,000 The replacement cost of James’ home is $130,000, and depreciation on the home is set at 30%. Assume that the policy has 80% coinsurance requirement. Indicate the extent to which each of the following losses would be covered under James’ Homeowners 3. Assume there is no deductible. 1. To meet the coinsurance requirement, how much should the policy limit be for the dwelling? Show your work. 2. Did James meet the coinsurance requirement? Show your calculation. 3. Lightning strikes the roof of the house and severely damages it. The actual cash value of the damaged roof is $11,200, and it will cost $16,000 to replace the damaged portion. a. Is lightning a covered peril here? Circle one: Yes (go to part b) No (go to part c) b. If yes, how much would the insurer pay? c. If no, explain why. 4. Assume the house burns to the ground. How much would the insurer pay for the dwelling portion?
Homeowners Insurance Assignment
Assume James owns a HO3 policy with the following limits:
Coverage A: $120,000
Coverage B: $ 12,000
Coverage C: $ 60,000
Coverage D: $ 36,000
Coverage E: $100,000
Coverage F: $ 5,000
The replacement cost of James’ home is $130,000, and
1. To meet the coinsurance requirement, how much should the policy limit be for the dwelling? Show your work.
2. Did James meet the coinsurance requirement? Show your calculation.
3. Lightning strikes the roof of the house and severely damages it. The actual cash value of the damaged roof is $11,200, and it will cost $16,000 to replace the damaged portion.
a. Is lightning a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay?
c. If no, explain why.
4. Assume the house burns to the ground. How much would the insurer pay for the dwelling portion?
5. Assume James was asked by the local government to move out of his house because of the wild fire threat 10 miles away lives. He had to stay at a motel for one week and the additional living expenses amount to $1, Would the expenses be covered? If so, by which section of policy? Circle your answer.
Coverage C Coverage D Coverage E Not covered
6. James negligently burns some leaves and causes his neighbor’s house to burn. The damage incurred by the neighbor is $170,000.
a. Which coverage section is relevant here? Circle one:
Coverage A Coverage B Coverage C Coverage E
b. How much would the insurer pay? Circle one:
$12,000 $60,000 $100,000 $120,000 $170,000
7. A living room window is broken in a hailstorm. The curtain (personal property) is water stained and must be replaced. The actual cash value of the damaged curtain is $200. Replacement cost is $300.
a. Is hailstorm a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay? Circle one: $200 $300
c. If no, explain why.
8. The hot water heater explodes and damages some household contents. The actual cash value of the damaged property is $1000, and the cost of replacing the property is $1600.
a. Is explosion a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay? Circle one: $1000 $1600
c. If no, explain why.
9. The home is badly damaged in a severe earthquake. The actual cash value of the damaged structure is $50,000. The cost to replace the damaged portion is $70,000
a. Is earthquake a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay? Circle one: $50,000 $70,000
c. If no, explain why.
10. A guest of the house accidentally slips on the kitchen floor and breaks an arm. The accident is not James’ fault. The medical bill incurred by the injured guest is $3,000. Would the expenses be covered? If so, by which section of policy? Circle your answer.
Not covered Covered by Coverage E Covered by Coverage F
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5. Assume James was asked by the local government to move out of his house because of the wild fire threat 10 miles away lives. He had to stay at a motel for one week and the additional living expenses amount to $1, Would the expenses be covered? If so, by which section of policy? Circle your answer.
Coverage C Coverage D Coverage E Not covered
6. James negligently burns some leaves and causes his neighbor’s house to burn. The damage incurred by the neighbor is $170,000.
a. Which coverage section is relevant here? Circle one:
Coverage A Coverage B Coverage C Coverage E
b. How much would the insurer pay? Circle one:
$12,000 $60,000 $100,000 $120,000 $170,000
7. A living room window is broken in a hailstorm. The curtain (personal property) is water stained and must be replaced. The actual cash value of the damaged curtain is $200. Replacement cost is $300.
a. Is hailstorm a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay? Circle one: $200 $300
c. If no, explain why.
8. The hot water heater explodes and damages some household contents. The actual cash value of the damaged property is $1000, and the cost of replacing the property is $1600.
a. Is explosion a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay? Circle one: $1000 $1600
c. If no, explain why.
9. The home is badly damaged in a severe earthquake. The actual cash value of the damaged structure is $50,000. The cost to replace the damaged portion is $70,000
a. Is earthquake a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay? Circle one: $50,000 $70,000
c. If no, explain why.
10. A guest of the house accidentally slips on the kitchen floor and breaks an arm. The accident is not James’ fault. The medical bill incurred by the injured guest is $3,000. Would the expenses be covered? If so, by which section of policy? Circle your answer.
Not covered Covered by Coverage E Covered by Coverage F
by Bartleby Expert- The hot water heater explodes and damages some household contents. The actual cash value of the damaged property is $1000, and the cost of replacing the property is $1600.
a. Is explosion a covered peril here? Circle one: Yes (go to part b) No (go to part c)
b. If yes, how much would the insurer pay? Circle one: $1000 $1600
c. If no, explain why.
by Bartleby Expert
