Colton Gentry of Lancaster, California, has owned his home for 10 years. When he purchased it for $178,000, Colton bought a $160,000 homeowners insurance policy. He still owns that policy, even though the replacement cost of the home is now $300,000.

a. If Colton suffered a $20,000 fire loss to the home, what percentage and dollar amount of the loss would be covered by his policy?

b. How much insurance on the home should Colton carry now to be fully reimbursed for a fire loss?