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Mark has a Homeowners 3 (special form) policy that provides $120,000 of insurance on his dwelling...

Mark has a Homeowners 3 (special form) policy that provides $120,000 of insurance on his dwelling and $100,000 on personal property. The replacement cost of the home is $200,000. Assume the coinsurance requirement is 80% and ignore any deductible. Treat each case separately

4. How much will Mark collect if his sofa, with a replacement value of $2,500 but an actual cash value of $1,800, is destroyed in a fire.

Solutions

Expert Solution

Amount collected by Mark = actual cash value * coinsurance rate

= 1800*80% = $1440

generally, damages to personal property are paid on an actual cash value (ACV) basis until actual repair or replacement is completed.

ekkarill92 answered 2 years ago
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