You you own a home with a market value of $175,000 of this amount $50,000 is appropriated to the land and $125,000 is appropriated the house it is estimated that the house would cost $135,000 to rebuild the personal property in your home is worth $55,000 including a $3,500 diamond ring and a $4,500 computer system you also own a car worth $25,000 you live in a state where there's a high risk for earthquakes you have $100,000 in savings and Investments that could be drawn on in case of emergency you currently have a standard HO-3 homeowners policy with $1,000 deductible which insures your house for $175,000 and your personal belongings for $85,000 and you carry the minimum requirements of your state for car insurance you have been advised to adjust your insurance covered based on the large loss principal:

*according to the large loss principal you should:

1) insure your property for the maximum amount available?

2) transfer all risk possible to insurance?

3) insure property for minimum amount only

4) insure your only those risks that you cannot afford to cover using your own Financial Resources?

* Based on the large loss principles and your particular situation a (1) ? is most appropriate for your homework policy.

* Given your current insurance coverage in the event of a fire your house and household belongings are over insured by (2)?.

* If you were to reduce the coverage on your home so it's replacement value of $135,000 then your personal property coverage could also be reduced to (3 )?. This is because the minimum personal coverage available on a HO-3 policy is (4)? of the home coverage.

(1) a. $0 deductible

b. $500 deductible

c. $1000 deductible

d. $5000 deductible

(2) a. $70,000

b. $30,000

c. $145,000

d. $$55,000

(3) a.$76,000

b. $67,500

c. $112,500

(4) a. 35%

b. 40%

c. 50%

* If you were to total your car in an accident at what you are at fault your insurance company is likely to pay (1 ) to repair your car this is because( 2) ?

(1) a. $0

b. $19,500

c. $25,000

(2) a. The accident is your fault

b. State minimum coverage does not. include Collision coverage

c. The car is totaled as opposed to only slightly damaged.

* Assume your state minimum liability limits for an automobile policy are 15/30/10 next assume that you caused an accident that involved multiple injuries to three people, each with medical expenses of $100,000. the maximum bodily injury payout that could be made on your behalf by insurance company for this accident is (1)?

(1) a. $30,000

b. $75,000

c. $150,000

d. $600,000

e. $1,000,000

f. $15,000

g. $500,000