Question
Chapter 10 Financial Planning Exercise 2 Evaluating homeowners policy coverage a. Last year, Thea and Rory Brown bought a home with a dwelling replacement value
Chapter 10 Financial Planning Exercise 2
Evaluating homeowners policy coverage
a. Last year, Thea and Rory Brown bought a home with a dwelling replacement value of $180,000 and insured it (via an HO-5 policy) for $155,000. The policy reimburses for actual cash value and has a $1,000 deductible, standard limits for coverage C items, and no scheduled property. Recently, burglars broke into the house and stole a 3-year-old television set with a current replacement value of $1,000 and an estimated useful life of 10 years. They also took jewelry valued at $2,100 and silver flatware valued at $2,700.
If the Browns policy has an 80% co-insurance clause, do they have enough insurance?
Options: Yes Or No
b. Assuming a 50% coverage C limit, calculate how much the Brown family would receive if they filed a claim for the stolen items. Do not round intermediate calculations. Round the answer to two decimal places.
$______________
c. What advice would you give the Brown family about their homeowner's coverage?
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