Homeowners Policy (HO)Pregunta 323 de 474
A dwelling would cost $400,000 to replace and carries Coverage A of $340,000. A covered fire causes $50,000 of repair cost, whose depreciated value is $38,000. The policy pays:
a.$50,000
b.$38,000
c.$44,000
d.$42,500
Explicación
The dwelling settles at replacement cost with no deduction for depreciation when the amount of insurance is at least 80% of full replacement cost, and $340,000 divided by $400,000 is 85%. That clears the test, so the full $50,000 repair cost is paid. The $38,000 answer is the actual cash value, which is how contents rather than the dwelling would settle.
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