Eric and Susan just purchased their first home, which cost $168,000. They purchased a homeowner’s policy to insure the home for $158,000 and personal property for $94,000. 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 $26,500. While the roof was under repair, the couple had to live in a nearby hotel for three days. The hotel bill amounted to $700. Assuming the insurance company settles claims using the replacement value method, what amount will the insurance company pay for the damages to the roof?
The cost of home is $168000 , while the policy amount for home insurance is $158000. So any claim towards home will be paid in that proportion.
They declined any coverage for additional living expenses. So the cost of living in hotel of $700 will not be considered for claim.
Also,the deductible for the policy is $500 which means the policy holder needs to bear loss upto $500.
Therefore, the insurance company will pay as below for the damages to the roof :
Proportionate Loss = 26500*158000/168000 = $24923
Less : Deductible =($500)
Claim payable by Insurance Company = $24423
Thus, if the insurance company settles claims using the
replacement value method, the insurance company will pay
$24423 for the damages to the roof.
Eric and Susan just purchased their first home, which cost $168,000. They purchased a homeowner’s policy...
4. Eric and Susan just purchased their first home, which cost $130,000. They purchased a homeowner's policy to insure the home for $120,000 and personal property for S75000. 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 $17,000. While the roof was under repair, the couple had to live...
Eric and Susan just purchased their first home, which cost $170,000. They purchased a homeowner’s policy to insure the home for $160,000 and personal property for $95,000. 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 $27,000. While the roof was under repair, the couple had to live in a...