Last year, Jose and Josefina Munoz bought a home with a dwelling replacement value of $250,000 and insured it (via an HO-5 policy) for $225,000. The policy reimburses 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 new computer with a current replacement value of $1,500 and an estimated useful life of three years. They also took jewelry valued at $2,500 and a coin collection valued at $1,500.If the Munozs’ policy has a 90 percent co-insurance clause, do they have enough insurance?Assuming a 50 percent coverage C limit, calculate how much the Munoz family would receive if they filed a claim for the stolen items.What advice would you give the Munoz family about their homeowner’s coverage?

Insurance is a contract represented by a policy that an individual or group receives financial…

Answered: Last year, Jose and Josefina Munoz…

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter10: Protecting Your Property

Section: Chapter Questions

Problem 2FPE: Last year, Thea and Rory Brown bought a home with a dwelling replacement value of $350,000 and...

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Last year, Jose and Josefina Munoz bought a home with a dwelling replacement value of $250,000 and insured it (via an HO-5 policy) for $225,000. The policy reimburses 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 new computer with a current replacement value of $1,500 and an estimated useful life of three years. They also took jewelry valued at $2,500 and a coin collection valued at $1,500.
1. If the Munozs’ policy has a 90 percent co-insurance clause, do they have enough insurance?
2. Assuming a 50 percent coverage C limit, calculate how much the Munoz family would receive if they filed a claim for the stolen items.
3. What advice would you give the Munoz family about their homeowner’s coverage?

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