Homeowner's Insurance Case Study

Scenario $1(15$ points$)$

Steve and Kelly own a single$-$family home insured under an Insurance Services Office $($ISO$)$ Homeowners $3-$ Special Form $($HO$-3)$ policy. One evering, a fire destroys the home's living room and several adjoining rooms. The structural damage to the home because of the fire is $575,000.$ The family's television is damaged. Cash $($$$375),$ which Steve kept in a countertop cookie jar for food shopping trips, was also destroyed. Steve and Kelly are insured under an unendorged $HO-3$ policy with a $$300,000$ dwelling limit and a $$500$ deductible. For the purposes of this case, assume that Steve and Kelly are in compilance with all policy conditions. including Coverage A replacement cost provisions:

identify the component of the $HO-3$ policy that would be used to determine whether coverage applies to Steve and Kelly at the time of the loss.

identify the component of the $HO-3$ policy that would be used to determine whether the policy applies to Steve and Kellys loss.

Steve and Kelly's $HO-3$ contains a provision in the Special Limits of Liability portion of its Conditions section that states that a limit applies to "money." Assuming their loss is covered under their $HO-3,$ how, if at all, would this condition affect the amount that Steve and Keily receive from the insurer?

Assuming their loss is covered under their $HO-3$ and accounting for the deductible, how much will Steve and Kelly receive for fire damage to their home under Coverage A$?$

Steve and Kelly's television, destroyed in the fire, was five years old but had a useful life of ten years. A new television equivalent to the destroyed model costs $$600.$ The insurer's claim representative determines that it would cost $$400$ to repair the damage. Assuming Steve and Kelly's loss is covered under their $HO-3,$ how would compensation for the television be settled under Coverage C$?$