Question
In: Finance
Jerry Carter's home is currently valued, on a replacement cost basis, at $244,000. When he last...
Jerry Carter's home is currently valued, on a replacement cost basis, at $244,000. When he last checked his policy, his home was insured for $182,354 and he did not have an inflation guard endorsement. If he has a $17,230 claim due to a kitchen fire, how much will his homeowner's insurance policy pay? How much would be paid if his home were totally destroyed? In order to obtain full replacement coverage, how much insurance should Jerry carry on his house?
If he has a $17,230 claim due to a kitchen fire, his homeowner's policy would pay $______. (Round to the nearest dollar.)
Solutions
Expert Solution
Minimum Amount of House Insurance coverage required according to rules as recommended by most insurance companies is 80%
80%×replacement cost of house = 244,000 × 80%= 195200
Minimum amount of Insurance to be bought was 195200 to get full replacement value for any damages.
But actual home insured is ( $ 182354 ) is less than the minimum required amount, reimbursement shall be on a proportionate basis
Amount of reimbursement = value of loss × value of insurance brought /minimum requirements
= 17230×182354/195200= 16096.10
jeff jeffy answered 2 years agoRelated Solutions
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