Question

1. Larry recently had a fire at his home. The fire caused about $20,000 of damage to the dwelling. The garage which was detached was valued at $15,000 was totally destroyed but did not have the car in it at the time of the fire. Replacement of Larry’s personal property damaged in the home and garage amounted to $16,500. In addition $500 in cash and a baseball card collection valued at $4,000 were destroyed. During the time the damages were being repaired, Larry stayed in a motel for one week and spent about $1,500 on food and lodging. The house had a value of $200,000 and was insured for $160,000 under an HO-3 policy with a $500 deductible.  

1. Assuming that the deductible was applied to the damage to the dwelling, calculate the amount covered by insurance and the amount Larry must pay for each loss listed: the dwelling, the garage, the cash and baseball card collection, and the extra living expenses.
2. How much of the amount of personal property loss would be covered by the insurance policy? Paid for by Larry?

Answer 1

Answers		Loss		Amount paid by insurance	Amount paid by Larry
Part A	Dwelling	20000	Total loss covered excluding deductible	19500	500
Part A	Garage	15000	10% of dwelling insurance amount	1950	13050
Part B	Personal property	16500	50% of dwelling insurance amount	9750	6750
Part A	Cash	500	Limit of 200	200	300
Part A	Card collection	4000	Not covered unless insured separately	0	4000
Part A	Extra living expenses	1500	Fully covered	1500	0