1. Last year Joseph and Sarah Freeman bought a home with a dwelling replacement value of $250,000 and insured it (via an HO-3 policy) for $310,000. The policy reimburses for actual cash value and has a $500 deductible, standard limits for coverage C items, and no scheduled property coverage. Recently, burglars broke into the house and stole a 2-year old television set with a current replacement value of $800 and an estimated useful life of 6 years. They also took jewelry valued at $2,500 and silver flatware valued at $4,500.

   1. If the Freemans policy has an 80% coinsurance clause, do they have enough insurance to cover the theft?

   2. Assuming a 50% coverage C limit, calculate how much the Freemans would receive if they filed a claim for the stolen items.

   3. What advice would you give the Freemans about their homeowners coverage?

1. Angela and Tom Sauders, both graduate students, moved into an apartment near their university. Angela wants to buy renter's insurance, but Tom thinks they don't need it because their furniture isn't worth much. Angela points out that they have some expensive computer and stereo equipment. To help the Sauders resolve their dilemma, suggest a plan for deciding how much insurance to buy, and give them some ideas for finding a policy.

1. Don Wood has a personal automobile policy (PAP) with coverage of $25,000/$50,000 for bodily injury liability, $25,000 for property damage liability, $5,000 for medical payments, and a $500 deductible for collision insurance. How much will his insurance cover in each of the following situations? Will he have any out-of-pocket costs?

   1. Don loses control and skids on ice, running into a parked car and causing $3,785 damage to the unoccupied vehicle and $2,350 damage to his own car.

   2. Don runs a stop sign and causes a serious auto accident, badly injuring two people. The injured parties win lawsuits against him, for $30,000 each.

   3. Don's 19-year old son borrows his car. He backs into a telephone pole and causes $50 damage to the car.