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Bill has a homeowners policy with form HO-3. His home has a replacement value of $80,000, and the contents are worth $45,000 at replacement cost or $35,000 at actual cash value. He has a detached greenhouse with heat and humidity control that houses his prized collection of exotic flowers. The flowers are valued at $11,000, and the greenhouse would cost $7,500 to replace at today’s prices. His policy has the following coverages:
|Unscheduled personal property||$30,000|
|Personal liability, per occurrence||$25,000|
A property coverage deductible of $250 per occurrence applies. Analyze each of the following situations in light of the above information. Determine all applicable coverage(s) and limit(s), and explain all factors that might affect the coverage provided by the policy.
Brenda Joy is an accountant in a small Kansas town. She works out of her home, which has a replacement value of $125,000 and an actual cash value of $105,000. Brenda purchased an HO-3 with the following limits:
|Coverage A:||$110,000, $250 deductible|
Discuss the application of Brenda’s HO-3 to the following losses.
As a newly graduated lawyer, Quinn Krueger was able to find a well-paying job and, as a result, could afford a large enough mortgage to buy a nice house. The mortgage company required that Quinn also purchase a homeowners policy, and so Quinn obtained an HO-3 with $95,000 on coverage A (the replacement cost value), $60,000 for coverage C, $100,000 on coverage E, and $2,000 on coverage F. How would Quinn’s insurer react to the following losses? Explain.