1) An insured has an ho3, no endorsements with the following coverages : A - $70k B- $7k C - $35k D- $14k the policy has a $500 deductible ($500 deductible windstorm/hurricane )
What is the amount payable (if any) when a windstorm caused extensive damage to the roof, requiring replacement of a portion. Cost to replace was $5k. Taking depreciation to acct, the actual cash value was $3k. At the time of loss the replacement value was $125k ?
Blank is payable
The correct answer was $3,500 I'm confused as to how that figure is correct . Obviously the insured is under-insured, needed at least 80% of the replacement value ($125k times 80% $100k) I assumed it would have been $3k minus the $500 deductible ...
In reply to Stephanie Tirado
Re: Question in unit 4 that I can't understand please help
by Grisel Padron -
Stephanie, I asked the same question and I'm waiting for a reply from a professor. I think that since deductible is taken from the loss/value $125,000 which is much higher than the coverage then what's payable is the damage at ACV $3,000plus the $500 deductible or perhaps replacement cost does not come into play because the coverage is $70,000 and for replacement cost to be effective, that amount should have been $100,000 ($125,000x 80%). Not sure. Need an answer from an instructor.
In reply to Grisel Padron
Re: Question in unit 4 that I can't understand please help
by Sandra King -
Hello,
I am not sure that the proffessor is monitoring this forum for questions about course work. I will move your post over to the Property and Casualty Course forum so that she can find it and answer it...
Sandra King.