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Toms home is currently valued, on a replacement cost basis, at $400,000. The last time he checked his home was insured for $300,000 and he

Toms home is currently valued, on a replacement cost basis, at $400,000. The last time he checked his home was insured for $300,000 and he did not have an inflation guard endorsement. If he has a $40,000 claim due to a kitchen fire, how much will his homeowners insurance policy pay? How much would he be paid if his home were totally destroyed? In order to obtain full replacement coverage, how much insurance should Tom carry on his house?

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