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Michelle purchased a Homeowners HO-03 policy with no special endorsements to cover her home and personal...

Michelle purchased a Homeowners HO-03 policy with no special endorsements to cover her home and personal property. Afire occurred and destroyed a big-screen television. Michelle paid $4,000 for the TV, which had an actual cash value at the time of the loss of $3,000 at the time of the fire. A replacement TV would cost $3,800. Ignoring any deductible, how much will Michelle collect for the loss of the TV? Explain your answer.

Solutions

Expert Solution

The damage occurred to the dwellings and other structures are paid on the basis of insured percentage of replacement cost but not at the actual cash value. The replacement cost of the value at which the dwelling or structures can be replaced at the current market prices.

In this case, Mr.Michelle replacement cost is $3,800. Therefore, the replacement cost of $3,800 he can collect from the insurer.

jeff jeffy answered 2 years ago
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