Last year, Thea and Rory Brown bought a home with a dwelling replacement value of $350,000 and insured it (via an HO-5 policy) for $310,000. 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 two-year-old television set with a current replacement value of $600 and an estimated useful life of eight years. They also took jewelry valued at $1,850 and silver flatware valued at $3,000. Make sure to account for depreciation.If the Browns’ policy has an 80 percent co-insurance clause, do they have enough insurance?Assuming a 50 percent coverage C limit, calculate how much the Brown family would receive if they filed a claim for the stolen items.What advice would you give the Brown family about their homeowner’s coverage?

A policyholder makes a formal request to an insurance company for coverage or compensation for a…

Answered: Last year, Thea and Rory Brown bought a…

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, Thea and Rory Brown bought a home with a dwelling replacement value of $350,000 and insured it (via an HO-5 policy) for $310,000. 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 two-year-old television set with a current replacement value of $600 and an estimated useful life of eight years. They also took jewelry valued at $1,850 and silver flatware valued at $3,000. Make sure to account for depreciation.

If the Browns’ policy has an 80 percent co-insurance clause, do they have enough insurance?
Assuming a 50 percent coverage C limit, calculate how much the Brown family would receive if they filed a claim for the stolen items.
What advice would you give the Brown family about their homeowner’s coverage?

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