John and Diane Wilson have a Homeowners (HO) policy with InsurCo. It is identical to your sample policy. It has no endorsements or increases in any limits that are applicable to any category of property. The Coverage A policy limit is $550,000, Coverage B is $300,000 and Coverage C is $250,000. [Assume that no deductible applies.]

During the last policy period, John and Diane have the following losses:

• A delivery person slips and falls on their walkway, which they had negligently maintained. The delivery person is injured.
• Their poodle bites their next-door neighbor.
• Diane is a tax lawyer, and one of her clients sues her for legal malpractice.
• A burglar breaks into John and Dianes house, and steals: (1) $10,000 in computer equipment, (2) $6,000 in oriental rugs, (3) a $3,000 coin collection, (4) a $7,000 stamp collection, (5) 3 TV sets worth $2,500 each, (6) $7,000 in antique firearms, a $15,000 stereo system, (7) $45,000 in jewelry.
• A pipe inside the house bursts suddenly, causing $55,000 in damage to the house. The water also caused permanent and total damage to: (1) $5,000 in cash under the mattress (totally washed away and vanished), (2) two fur coats worth $20,000 each, and (3) a baseball card collection worth $5,000.
• A rainstorm [Rainstorm # 1] causes a flood in the street in front of John and Dianes house, and the water ultimately rushes under their front door (the door isnt damaged). The water damages their living room and it would cost $20,000 to repair this damage. Two days later another huge storm [Rainstorm # 2] comes through the area. Sheets of water come down the road and erode land under John and Dianes house. This causes the slab below their house to crack, and their house is completely destroyed.

1. All of the following statements about compensation under John and Dianes HO policy for property losses are true, EXCEPT:

Select one:

a. John and Diane cannot collect the full value of their stamp and coin collections

b.

John and Diane can collect $6,000 for the theft of their oriental rugs

c.

John and Diane can collect a maximum of $5,000 for the theft of the TV and stereo systems

d.

John and Diane can collect $10,000 for the theft of their computer equipment