Sara and John Metfict are buying a new home in New York State. The property is in a wooded area in the Adirondack Park, near a community that experienced a severe wildfire two years ago. The home is valued at $400,000, not including the land, and the Metficts have about $100,000 in personal property, including $10,000 in jewelry. Their net worth, including their home equity, is about $250,000.

What type of homeowner's insurance would you recommend for the Metficts?

What is the minimum amount of homeowner's insurance the Metficts should purchase? Please show your calculations.

If the Metficts' homeowner's policy requires that the face amount be 90 percent of the actual value and the Metficts insure for less than that amount, what financial risk do they face?

Should the Metficts consider additional coverage for their personal property? Why or why not?

Should the Metficts consider purchasing an umbrella policy? Why or why not?

What other risk management tools should the Metficts employ to reduce their risk of losses due to wildfire?