Last year, Paul and Joanna Stillman bought a home with a dwelling replacement value of $250,000 and insured it (via an HO-5 policy) for $210,000. The policy reimburses for 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.
a. If the Stillmans’s policy has an 80 percent co-insurance clause, do they have enough insurance?
b. Assuming a 50 percent coverage C limit, calculate how much the Stillmans would receive if they filed a claim for the stolen items.
c. What advice would you give the Stillmans about their homeowner’s coverage?
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