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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?

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Expert Solution

Answer is $750.

Under an HO-3 policy, an insured will receive full replacement cost coverage on a loss to dwelling (here chair) if the insured carries a limit equal to or greater than 80% of replacement cost of the dwelling.

Since here condition is satisfying (80,000/1,00,000=80%),insured can claim full replacement cost of $750

jeff jeffy answered 2 years ago
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