Jack and Jane are married and own a home insured for $150,000 under an unendorsed HO-3 policy.

Case Application

Jack and Jane are married and own a home insured for $150,000 under an unendorsed HO-3 policy. The replacement cost of the home is $250,000. Personal property is insured for $75,000. Jane has jewelry valued at $10,000. Jack has a coin collection valued at $15,000 and a motorboat valued at $20,000.

a. Assume you are a financial planner who is asked to evaluate the couple’s HO-3 policy. Based on the facts given, do you believe that Jack and Jane’s coverages are adequate? If not, make several recommendations for improving the coverage.

b. A fire damaged one bedroom of the home. The actual cash value of the loss is $10,000. The cost of repairs is $16,000. How much will the insurer pay for the loss?

c. A burglar broke into the home and stole a new television, jewelry, and several paintings. The actual cash value of the stolen property is $4,000. The cost of replacing the property is $9,000. In addition, the coin collection was taken. Indicate the extent, if any, to which an unendorsed HO-3 policy will cover these losses.

d. Assume that Jack and Jane have a disagreement with their insurer concerning the value of the above losses. How would the dispute be resolved under their HO-3 policy?

e. Assume that Jane operates an accounting business from the home. Her home business office contains a computer used solely for business, office furniture, file cabinets, and other business personal property. Explain whether her HO-3 policy would cover business personal property used in a home business.

Solutions

Expert Solution

Given information,

home insured = $150,000

replacement cost of the home = $250,000

Personal property is insured = $75,000

jewelry valued = $10,000

coin collection = $15,000

motorboat valued = $20,000

a) :-

As a money related organizer I would recommends to expand the front of home protection as he is having a protection front of $150,000 while cost of substitution is $250,000 so he should build the front of home protection.

b) :-

Insurance agency pay $10,000 for the real misfortune happened not for the expense of substitution .

c) :-

Company will pay $4,000 for stolen articles equivalent to money esteem and $15,000 for accumulation of coin since its genuine esteem isn't given.

d) :-

Debate would be settled by the protection approach highlights and according to the directions of protection specialists.

e) :-

No ,

His business property from home would not be secured from home protection strategy and business misfortunes would not be secured so a different protection arrangement for business protection would be required .

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The insured has an unendorsed HO-3 policy. The home is insured for an $80,000 limit on...

The insured has an unendorsed HO-3 policy. The home is insured for an $80,000 limit on A and the home has a replacement cost of $100,000. Fire occurs at the home. A chair is destroyed in the fire. Replacement cost of the chair is $750. Actual Cash Value (ACV) of the chair is $400. How much will be paid for the chair?

Which of the following statements about covered perils under an unendorsed HO-3 policy is true?

Which of the following statements about covered perils under an unendorsed HO-3 policy is true?a) the dwelling is covered on a named-peril basis but the other structures are covered on an open-peril basisb) both the dwelling and other structures are covered on a named-peril basisc) the dwelling is covered on an open-peril basis but other structures are covered on a named-peril basisd) both the dwelling and other structures are covered on an open-peril basis

Persons insured under Section I of the HO-3 policy include which of the following? I. The...

Persons insured under Section I of the HO-3 policy include which of the following? I. The named insured's mother-in-law, who lives in the same household as the insured. II. A 16-year-old Italian exchange student, who is residing with the named insured while attending high school in the United States.

RIsk Managment and Insurance Scott has his home and personal property insured under an unendorsed Homeowners...

RIsk Managment and Insurance Scott has his home and personal property insured under an unendorsed Homeowners 3 (Special Form) policy. Indicate whether each of the following losses is covered. (Assume the policy has no deductible.) If the loss is not covered, explain why it is not. 1. The carpet was heavily damaged when Scott left the bath tub running while he answered the telephone. 2. The home is located approximately one block from the Federal Court House and is damaged...

John and Jenifer are a married couple, and they jointly own a home insured for $200,000...

John and Jenifer are a married couple, and they jointly own a home insured for $200,000 under an unendorsed HO-3 policy. The replacement cost of the home is $275,000. Personal property is insured for $90,000. Jenifer has jewelry valued at $20,000. John has a coin collection valued at $15,000 and a motorboat valued at $20,000. Assume you are a financial planner who is asked to evaluate the couple’s HO-3 policy. a) A burglar broke into the home and stole a...

Jack and Jane are married and file a joint return for 2020. Theyhave wage income...

Jack and Jane are married and file a joint return for 2020. They have wage income of $150,000; net long-term capital gains of $20,000; net short-term capital gains of $5,000; corporate bond interest of $3,000; share of S corporation income of $8,000; cash distributions from the S corporation of $3,000; ordinary cash dividends of $6,000; qualifying cash dividends of $5,000; inheritance received from deceased aunt’s estate of $18,000; deductions for AGI (Adjusted Gross Income) of $11,000; itemized deductions of $26,000;...

Comparing homeowner’s policy forms. (HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8) A).In what ways is the...

Comparing homeowner’s policy forms. (HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8) A).In what ways is the coverage for each of the forms similar? B) How does the coverage differ among the policies? Address the types of coverage in each, perils covered, benefits provided, types of “homeowners” that each one is tailored for, etc.

Rajab has a bookstore near a sea shore, which is insured for €150,000 under a commercial...

Rajab has a bookstore near a sea shore, which is insured for €150,000 under a commercial property insurance policy. The policy contains an 80 percent coinsurance clause. Rajab’s bookstore suffered a loss worth €100,000 due to tsunami. If the replacement cost of the bookstore at the time of loss is €250,000, how much will he collect from his insurer? Rajab will collect €Answer for the loss from his insurer.

2) Comparing homeowners policy forms. (HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8) In what ways is...

2) Comparing homeowners policy forms. (HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8) In what ways is the coverage for each of the forms similar? How does the coverage differ among the policies? Address the types of coverage in each, perils covered, benefits provided, types of “homeowners” that each one is tailored for, etc. 2) What are three exclusions from the homeowner’s policy that you think are important for everyone to know about? Explain why.

1, a)Carolyn owns a home with a replacement cost of $400,000 that is insured under a...

1, a)Carolyn owns a home with a replacement cost of $400,000 that is insured under a Homeowners 3 policy for $260,000. The roof was badly damaged in a severe windstorm, and it will cost $20,000 to repair the roof. The actual cash value of the loss is $15,000. Ignoring any deductible, how much will Carolyn collect from the insurer? b) Carolyn owns a home with a replacement cost of $400,000 that is insured under a Homeowners 3 policy for $340,000....

Subjects