Eric and Susan just purchased their first home, which cost $166,000. They purchased a homeowner’s policy to insure the home for $156,000 and personal property for $93,000. They declined any coverage for additional living expenses. The deductible for the policy is $500. Soon after Eric and Susan moved into their new home, a strong windstorm caused damage to their roof. They reported the roof damage to be $26,000. While the roof was under repair, the couple had to live in a nearby hotel for three days. The hotel bill amounted to $680. Assuming the insurance company settles claims using the replacement value method, what amount will the insurance company pay for the damages to the roof?

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter7: Losses—deductions And Limitations
Section: Chapter Questions
Problem 65P
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Eric and Susan just purchased their first home, which cost $166,000. They purchased a homeowner’s policy to insure the home for $156,000 and personal property for $93,000. They declined any coverage for additional living expenses. The deductible for the policy is $500.

Soon after Eric and Susan moved into their new home, a strong windstorm caused damage to their roof. They reported the roof damage to be $26,000. While the roof was under repair, the couple had to live in a nearby hotel for three days. The hotel bill amounted to $680. Assuming the insurance company settles claims using the replacement value method, what amount will the insurance company pay for the damages to the roof?

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