A) Joe has an HO-3 policy. He also has an unattached converted garage that he has turned into an apartment, and he rents it to a full-time college student. The apartment is destroyed by fire. Will this claim according to the HO-3 contract be paid to Joe or not? Provide explanation to your answer.

B)

Mr. Han has an HO-3 contract with $100,000 dwelling coverage, $50,000 personal property coverage, and a $500 deductible. The dwelling is 50% depreciated. Sewage backs up into the basement and destroys the furnace, which will cost $8,000 to replace. How much of the damage insurer pays to Han? Provide explanation to your answer.