- Larry recently had a fire at his home. The fire caused about $20,000 of damage to the dwelling. The garage which was detached was valued at $15,000 was totally destroyed but did not have the car in it at the time of the fire. Replacement of Larrys personal property damaged in the home and garage amounted to $16,500. In addition $500 in cash and a baseball card collection valued at $4,000 were destroyed. During the time the damages were being repaired, Larry stayed in a motel for one week and spent about $1,500 on food and lodging. The house had a value of $200,000 and was insured for $160,000 under an HO-3 policy with a $500 deductible. Use table 10-1 on page 3088 to answer the following questions:
- Assuming that the deductible was applied to the damage to the dwelling, calculate the amount covered by insurance and the amount Larry must pay for each loss listed: the dwelling, the garage, the cash and baseball card collection, and the extra living expenses.
- How much of the amount of personal property loss would be covered by the insurance policy? Paid for by Larry?
HO-2 (Broad Form) Perils 1-16 Amount based on replacement cost, minimum $15,000 10 percent of insurance on the home (minimum) 5 percent of insurance on the home, $500 maximum per item per item the home (minimum) 20 percent of insurance on Table 10-1 Summary of Homeowner's Insurance Policies HO-3 (Special Form) All perils except those HO-1 (Basic Form) specifically excluded Perils covered Perils 1-4, 6, 8-12 for buildings: perils (descriptions are given below) 1-16 on personal property (does not include glass breakage) Amount based on replacement cost House and any other Amount based on minimum $20,000 attached buildings replacement cost minimum $15,000 10 percent of insurance on the home (minimum) Detached buildings 10 percent of insurance on (appurtenant structures) the home (minimum) 5 percent of insurance on the home, $500 maximum Trees, shrubs, plants, etc. 5 percent of insurance on the home, $500 maximum per item Personal property 50-70 percent of insurance on 50-70 percent of insurance on 50-70 percent of insurance the home (minimum) the home (minimum) 20 percent of insurance on Loss of use and/or additional 10 percent of insurance on the home living expense the home the home $1,000 Credit card, forgery, $1,000 $1,000 counterfeit money Liability coverage/limits (for all policies) Comprehensive personal $300,000 For the following classes of personal property, special limits liability apply on a per-occurrence basis (e.g., per fire or theft): No-fault medical payments $1,000 money, coins, bank notes, precious metals (gold, silver, etc.) No-fault property damage $500 $200, computers, $5,000, securities, deeds, stocks, bonds, tickets, stamps. $1,000; watercraft and trailers, including furnishings, equipment, and outboard motors. $1,000, trailers other than for watercraft, $1,000, jewelry, watches, furs, $1,000, silverware, goldware, etc., $2,500; guns, $2,000. List of perils covered 1. Theft 10. Riot or Civil Commotion 2. Fire or Lightning 11. Damage caused by Aircraft 3. Explosion 12. Vandalism or Malicious Mischief 4. Smoke 13. Damage due to weight of Ice, Snow, or Sleet 5. Freezing 14. Sudden & Accidental Tearing Apart, Cracking, Burning, or 6. Vehicles Bulging 7. Falling Objects 15. Sudden & Accidental Damage from Artificially Generated 8. Volcanic Eruption Electric Current 9. Windstorm or Hail 16. Accidental Discharge or Overflow of Water from Plumbing, Air conditioning etc Special limits of liability Table 10-1 Summary of Homeowner's Insurance Policies (Continued) HO-4 (Renter's Contents Broad Form) Perils 1-16 10 percent of personal property insurance on additions and alterations to the apartment Not covered HO-6 (For Condominium owners) Perils 1-16 $1,000 on owner's additions and alterations to the unit HO-8 (For Older Homes) Perils 1-4, 6, 8-12 Amount based on actual cash value of the home Not covered (unless owned solely by 10 percent of insurance on the the insured) home (minimum) 10 percent of personal property 10 percent of personal property 5 percent of insurance on the home, insurance, $500 maximum per item insurance, $500 maximum per item $500 maximum per item Chosen by the tenant to reflect the Chosen by the homeowner to reflect 50-70 percent of insurance on the home value of the items, minimum $6,000 the value of the items, minimum (minimum) $6,000 20 percent of personal property 40 percent of personal property 20 percent of insurance on the home insurance insurance $1,000 $1,000 $1,000 These perils that are typically excluded in all standard homeowners 11. Theft to a Dwelling Under Construction insurance policies and must be purchased as a rider to the policy on 12. Vandalism or Malicious Mischief (only if vacant separately, if available at all: more than 60 days) 1. Earth Movement (earthquake coverage can be endorsed) 13. Mold, Fungus, or Wet Rot (some coverage may be 2. Ordinance or Law (some coverage may be provided in your policy) provided in your policy) 3. Water Damage (Sudden & Accidental Water Damage is automatically 14. Wear & Tear, Deterioration included; others can be endorsed onto the policy) 15. Mechanical Breakdown 4. Power Failure 16. Smog, Rust & Corrosion 5. Neglect 17. Smoke from Agricultural Smudging & Industrial 6. War Operations 7. Nuclear Hazard 18. Discharge, Dispersal, Seepage of Pollutants 8. Intentional Loss 19. Settling, Shrinking, Bulging, or Expanding 9. Government Action 20. Birds, Vermin, Rodents, Insects 10. Collapse (some coverage may be provided in your policy) 21. Animals Owned by Insured HO-2 (Broad Form) Perils 1-16 Amount based on replacement cost, minimum $15,000 10 percent of insurance on the home (minimum) 5 percent of insurance on the home, $500 maximum per item per item the home (minimum) 20 percent of insurance on Table 10-1 Summary of Homeowner's Insurance Policies HO-3 (Special Form) All perils except those HO-1 (Basic Form) specifically excluded Perils covered Perils 1-4, 6, 8-12 for buildings: perils (descriptions are given below) 1-16 on personal property (does not include glass breakage) Amount based on replacement cost House and any other Amount based on minimum $20,000 attached buildings replacement cost minimum $15,000 10 percent of insurance on the home (minimum) Detached buildings 10 percent of insurance on (appurtenant structures) the home (minimum) 5 percent of insurance on the home, $500 maximum Trees, shrubs, plants, etc. 5 percent of insurance on the home, $500 maximum per item Personal property 50-70 percent of insurance on 50-70 percent of insurance on 50-70 percent of insurance the home (minimum) the home (minimum) 20 percent of insurance on Loss of use and/or additional 10 percent of insurance on the home living expense the home the home $1,000 Credit card, forgery, $1,000 $1,000 counterfeit money Liability coverage/limits (for all policies) Comprehensive personal $300,000 For the following classes of personal property, special limits liability apply on a per-occurrence basis (e.g., per fire or theft): No-fault medical payments $1,000 money, coins, bank notes, precious metals (gold, silver, etc.) No-fault property damage $500 $200, computers, $5,000, securities, deeds, stocks, bonds, tickets, stamps. $1,000; watercraft and trailers, including furnishings, equipment, and outboard motors. $1,000, trailers other than for watercraft, $1,000, jewelry, watches, furs, $1,000, silverware, goldware, etc., $2,500; guns, $2,000. List of perils covered 1. Theft 10. Riot or Civil Commotion 2. Fire or Lightning 11. Damage caused by Aircraft 3. Explosion 12. Vandalism or Malicious Mischief 4. Smoke 13. Damage due to weight of Ice, Snow, or Sleet 5. Freezing 14. Sudden & Accidental Tearing Apart, Cracking, Burning, or 6. Vehicles Bulging 7. Falling Objects 15. Sudden & Accidental Damage from Artificially Generated 8. Volcanic Eruption Electric Current 9. Windstorm or Hail 16. Accidental Discharge or Overflow of Water from Plumbing, Air conditioning etc Special limits of liability Table 10-1 Summary of Homeowner's Insurance Policies (Continued) HO-4 (Renter's Contents Broad Form) Perils 1-16 10 percent of personal property insurance on additions and alterations to the apartment Not covered HO-6 (For Condominium owners) Perils 1-16 $1,000 on owner's additions and alterations to the unit HO-8 (For Older Homes) Perils 1-4, 6, 8-12 Amount based on actual cash value of the home Not covered (unless owned solely by 10 percent of insurance on the the insured) home (minimum) 10 percent of personal property 10 percent of personal property 5 percent of insurance on the home, insurance, $500 maximum per item insurance, $500 maximum per item $500 maximum per item Chosen by the tenant to reflect the Chosen by the homeowner to reflect 50-70 percent of insurance on the home value of the items, minimum $6,000 the value of the items, minimum (minimum) $6,000 20 percent of personal property 40 percent of personal property 20 percent of insurance on the home insurance insurance $1,000 $1,000 $1,000 These perils that are typically excluded in all standard homeowners 11. Theft to a Dwelling Under Construction insurance policies and must be purchased as a rider to the policy on 12. Vandalism or Malicious Mischief (only if vacant separately, if available at all: more than 60 days) 1. Earth Movement (earthquake coverage can be endorsed) 13. Mold, Fungus, or Wet Rot (some coverage may be 2. Ordinance or Law (some coverage may be provided in your policy) provided in your policy) 3. Water Damage (Sudden & Accidental Water Damage is automatically 14. Wear & Tear, Deterioration included; others can be endorsed onto the policy) 15. Mechanical Breakdown 4. Power Failure 16. Smog, Rust & Corrosion 5. Neglect 17. Smoke from Agricultural Smudging & Industrial 6. War Operations 7. Nuclear Hazard 18. Discharge, Dispersal, Seepage of Pollutants 8. Intentional Loss 19. Settling, Shrinking, Bulging, or Expanding 9. Government Action 20. Birds, Vermin, Rodents, Insects 10. Collapse (some coverage may be provided in your policy) 21. Animals Owned by Insured
