Next, I will analyze the property insurance plan and the liability risks. The Smith’s 3 bedroom, 2 baths, house has 1,600 square feet of living space with an attached garage. The house in west Edmond was newly built when they bought it 6 years ago for $145,000. Alex said that the replacement cost of the home is $250,000. They have an unendorsed HO-3 policy with Coverage A limits of $120,000. The plan covers the home and the attached garage. Since the home is insured for $145,000, the other structures are covered for an additional $14,500. Based on the information given, I do not believe that Alex and Marty’s coverages are adequate. Covered losses to the dwelling and other structures are paid on the basis of replacement cost with no deduction for depreciation.
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If the amount of insurance carried is equal to at least 80 percent of the replacement cost of the damaged building at the time of loss full replacement cost is paid up to the limits of the policy with no deduction for depreciation. Replacement cost is the amount necessary to repair or replace the dwelling with the material of like kind quality at a current price. Insurance on Jack and Jane’s home should be increased to at least $200,000 (80% of the $250,000 replacement cost of the home) to comply with the replacement cost provision. Since the present coverages are inadequate, some changes should be made. An extended replacement cost or guaranteed cost endorsement could be added, which requires the home to be insured to $250,000. Alex inherited an emerald necklace and earrings, valued at $6,000, from a grandmother. Jewelry is covered only for a maximum of $1500 if the jewelry is stolen. Alex’s jewelry should be scheduled and specifically insured to its full value. Marty’s home business office contains a computer used solely for business, office furniture, file cabinets, and other business personal
If the amount of insurance carried is equal to at least 80 percent of the replacement cost of the damaged building at the time of loss full replacement cost is paid up to the limits of the policy with no deduction for depreciation. Replacement cost is the amount necessary to repair or replace the dwelling with the material of like kind quality at a current price. Insurance on Jack and Jane’s home should be increased to at least $200,000 (80% of the $250,000 replacement cost of the home) to comply with the replacement cost provision. Since the present coverages are inadequate, some changes should be made. An extended replacement cost or guaranteed cost endorsement could be added, which requires the home to be insured to $250,000. Alex inherited an emerald necklace and earrings, valued at $6,000, from a grandmother. Jewelry is covered only for a maximum of $1500 if the jewelry is stolen. Alex’s jewelry should be scheduled and specifically insured to its full value. Marty’s home business office contains a computer used solely for business, office furniture, file cabinets, and other business personal