Question

Smith Family

Assume the Smith family of Philadelphia, Pennslyvania purchased their home in 2002 for $80,000.  Since then, comparable homes in their neighborhood have most recently sold for $200,000.  The cost to replace the home would be $180,000.  It is estimated that the house is one-third depreciated.  The Smith’s have a $175,000 (face amount coverage A)  Homeowners policy in force, similar to the policy shown in the Appendix.  Answer the following questions as if each question were a separate event.

1)  How much will the Smith’s collect for a total covered fire loss under coverage A?

2)  How much will be collected for a $20,000 partial loss under coverage A

3)  What would be your answers to questions 1 and 2 above if the Smith’s had only $80,000 of insurance of Coverage A?

a. question 1

Answer 1

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