1. How Much of Fire Loss Will Be Covered? Toula and Ian Miller of St. Clairsville, Ohio, recently suff ered a fi re in their home. The fi re, which began in a crawl space at the back of the house, caused $24,000 of damage to the dwelling.

The garage, valued at $8400, was totally destroyed but did not contain a car at the time of the fi re. Replacement of the Millers’ personal property damaged in the home and garage amounted to $18,500. In addition, $350 in cash and a stamp collection valued at $3215 were destroyed. While the damage was being repaired, the Millers stayed in a motel for one week and spent $1350 on food and lodging. The house had a value of $95,000 and was insured for $68,400 under an HO-3 policy with a $250 deductible. Use Table 10.2 to answer the following questions. (Hint: You must fi rst determine whether the Millers have adequate dwelling replacement coverage and, if not, what percentage of the necessary 80 percent coverage they do have. The resulting answer will determine the percentage of the loss to the dwelling covered, and consequently the amount to be reimbursed by the insurance company.)

(a) Assuming that the deductible was applied to the damage to the dwelling, calculate the amount covered by insurance and the amount that the Millers must pay for each loss listed: the dwelling, the garage, the cash and stamp collection, and the extra living expenses.

(b) How much of the amount of the personal property loss would be covered by the insurance policy? Paid for by the Millers?

(c) Assuming that they have contents replacement-cost protection on the personal property, what amount and percentage of the total loss must be paid by the Millers?