Question
1. Apply What You've Learned - Managing Property and LiabilityRisk Scenario: You own a home with a market value of $245,000. Of this amount,
1. Apply What You've Learned - Managing Property and LiabilityRisk Scenario: You own a home with a market value of $245,000. Of this amount, $30,000 is apportioned to the land and $215,000 is apportioned to house. It is estimated that the house would cost $190,000 to rebuild. The personal property in your home is worth $70,000, including a $2,000 diamond ring and a $3,000 computer system. You also own a car worth $20,000. You live in a state where there is a high risk for earthquakes. You have $100,000 in savings and investments that could be drawn on in case of emergency. You currently have a standard HO-3 homeowner's policy a $500 deductible, which insures your house for $245,000 and your personal belongings for $130,000, and you carry the minimum requirements your state for car insurance. You have been advised to adjust your insurance coverage based on the large-loss principle. According to the large-loss principal, you should: Insure only those risks that you cannot afford to cover using your own financial resources. Transfer all risks possible to insurance. Insure your property for the maximum amount available. Insure your property for minimum amounts only. Based on the large-loss principle and your particular situation, a $1,000 deductible is most appropriate for your homeowner's policy. Given your current insurance coverage, in the event of a fire, you $0 deductible Id belongings are over-insured by $500 deductible to If you were to reduce the coverage on your home to its replacem This is because the minimum personal covera $1,000 deductible , then your personal property coverage could also be reduc -3 policy is of the home coverage. $5,000 deductible In what area is the coverage on the home itself severely lacking?
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