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1. How Much of Fire Loss Will Be Covered? Toula and Ian Miller of Gainesville, Florida, recently suffered a fire at their home. The fire, which began in a crawl space at the back of the house, caused $50,000 of dam- Pages 309 and DO IT IN CLASS age to the dwelling itself. Their garage, val- 311 ued at $20,000, was totally destroyed but did not contain a car at the time of the fire. Replacement of the Millers' personal property damaged in the home and garage amounted to $23,000. In addition, $350 in cash and a stamp collection valued at $3,215 were de- stroyed. While the damage was being repaired, the Mill- ers stayed in a motel for one week and spent $1,350 on food and lodging. The house had a value of $195,000 and was insured for $150,000 under an HO-3 policy with a $250 deductible. Use Table 10-1 on page 309 to answer the following questions. (Hint: You must first determine whether the Millers have adequate dwelling replacement coverage and, if not, what percentage of the necessary 80 percent coverage they do have. The resulting answer will determine the percentage of the loss to the dwelling covered, and consequently the amount to be reimbursed by the insurance company.) (a) Assuming that the deductible was applied to the dam- age to the dwelling, calculate the amount covered by insurance and the amount that the Millers must pay for each loss listed: the dwelling, the garage, the cash and stamp collection, and the extra living expenses. (c) Assuming that they have contents replacement-cost protection on the personal property, what amount and percentage of the total loss must be paid by the Millers? 308 PART 3 Income and Asset Protection Table 10-1 Summary of Homeowner's Insurance Policies Perils covered (descriptions are given below) House and any other attached buildings Detached buildings Cappurtenant structures) Trees, shrubs, plants, etc HO-1 (Basic Form) HO-2 (Broad Form) HO-3 (Special Form) Penis 1-4, 6, 8-12 Peris 1-16 All penis except those speofically excluded for buildings, perils 1-16 on personal property (does not include glass breakage Amount based on Amount based on Amount based on replacement cost replacement cost. replacement cost, minimum $15,000 minimum $15,000 minimum 520,000 10 percent of insurance on 10 percent of insurance on 10 percent of insurance on the home (minimum) the home (minimum) the home (minimum) S percent of insurance on 5 percent of insurance on 5 percent of insurance on the home, 5500 maximum the home, $500 maximum the home, $500 maximum per item per item per item 50-70 percent of insurance on 50-70 percent of insurance on 50-70 percent of insurance on the home (minimum) the home (minimum) the home (minimum) 10 percent of insurance on 20 percent of insurance on 20 percent of insurance on the home the home the home $1,000 $1,000 $1.000 Personal property Loss of use and/or additional living expense Credit card, forgery counterfeit money Liability coverage/limits for all policies) Comprehensive personal liability No-fault medical payments No-fault property damage Special limits of liability $300,000 $1,000 $500 For the following classes of personal property, special limits apply on a per-occurrence basis (eg. per fire or theft): money, coins, banknotes, precious metals (gold, silver, etcX $200, computers. $5,000, securities, deeds, stocks, bonds, tickets, stamps, 51.000; 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, 52,000 List of perils covered 1. Theft 2. Fire or Lightning 3. Explosion 4. Smoke 5. Freezing 6. Vehides 7. Falling Objects 8. Volcanic Eruption 9. Windstorm or Hait 10. Rotor Civil Commotion 11. Damage caused by Aircraft 12. Vandalism or Malicious Mischief 13. Damage due to weight of Ice, Snow, or Sleet 14. Sudden & Acodental Tearing Apart, Cracking, Burning or Bulging 15. sudden 8 Accidental Damage from Artificially Generated Electric Current 16. Accidental Discharge or Overflow of Water from Plumbing Air conditioning etc