E Ch 10: Apply What You've Learned - Managing Property and Liability Risk Back to Assignment Attempts Average / 14 1. Apply What You've Learned - Managing Property and Liability Risk Scenario: You own a home with a market value of $275,000. Of this amount, $85,000 is apportioned to the land and $190,000 is apportioned to the house. It is estimated that the house would cost $225,000 to rebuild. The personal property in your home is worth $95,000, including a $3,000 diamond ring and a $4,000 computer system. You also own a car worth $35,000. You live in a state where there is a high risk for earthquakes. You have $150,000 in savings and investments that could be drawn on in case of emergency. You currently have a standard HO-3 homeowner's policy with a $500 deductible, which insures your house for $275,000 and your personal belongings for $135,000, and you carry the minimum requirements of 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:

O Insure your property for minimum amounts only. O Insure your property for the maximum amount available. insure only those risks that cannot afford to cover using your own financial resources. transfer all risks possible to insurance Oct 23 9:05