Evaluating homeowner’s policy coverage.

Last year, Thea and Rory Brown bought a home with a dwelling replacement value of $350,000 and insured it (via an HO-5 policy) for $310,000.

The policy reimburses for actual cash value and has a $500 deductible, standard limits for coverage C items, and no scheduled property.

Recently, burglars broke into the house and stole a two-year-old television set with a current replacement value of $600 and an estimated useful life of eight years. They also took jewelry valued at $1,850 and silver flatware valued at

$3,000.

a. If the Browns’ policy has an 80 percent co-insurance clause, do they have enough insurance?

b. Assuming a 50 percent coverage C limit, calculate how much the Brown family would receive if they filed a claim for the stolen items.

c. What advice would you give the Brown family about their homeowner’s coverage? T=8