Levi and Riley Scott, ages 30 and 28, were recently married in Denver. Levi is an electrical engineer with Bright Solutions, a computer component design firm. Riley has a master’s degree in education and teaches at a local middle school. After living in an apartment for six months, the Scotts have negotiated the purchase of a new home in a rapidly growing Denver suburb. Denver City Savings and Loan Association has approved their loan request for $369,000, which represents 90 percent of the $410,000 purchase price. Before closing the loan, the Scotts must obtain homeowner’s insurance for the home. The Scotts currently have an HO-4 renter’s insurance policy, which they purchased from Levi’s bridge partner, Henry Adams, who is an agent with the King Insurance Company. To learn about the types of available homeowner’s insurance, Levi has discussed their situation with Henry, who has offered them several homeowner’s policies for their consideration. He has recommended that the Scotts purchase an HO-5 policy because it would provide them with comprehensive overage.

1. What forms of homeowner’s insurance are available? Which forms should the Scotts consider?

2. What are the perils against which the home and its contents should be insured?

3. Discuss the types of loss protection provided by the homeowner’s policies under consideration.

4. What advice would you give the Scotts regarding Henry’s suggestion? What coverage should they buy?