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Managing Property and Liability Risk. Alex has owned his home for ten years. When he purchased it for $178,000, Alex bought a $160,000 homeowner's insurance

Managing Property and Liability Risk. Alex has owned his home for ten years. When he purchased it for $178,000, Alex bought a $160,000 homeowner's insurance policy with a $500 deductible. He still owns that policy, even though the replacement cost of the home is now $300,000, and the policy required coverage of 80 percent of the replacement cost.

How much insurance on the home should Alex carry now to be fully insured?

If Alex suffered a $20,000 fire loss to the home, how much would he be reimbursed for by the insurance company?

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