When Carolina’s house burned down, she lost household items worth a total of $77

Question

When Carolina’s house burned down, she lost household items worth a total of $77,000. Her house was insured for $200,000 and her homeowner’s policy provided coverage for personal belongings up to 55 percent of the insured value of the house.

(a) Calculate how much insurance coverage Carolina’s policy provides for her personal possessions.

Amount of insurance coverage ( )

Will Carolina be reimbursed in full for her household items?

Will Carolina be reimbursed in full for her household items?

Explanation / Answer

(a)

Calculate how much insurance coverage C’s policy provides for her personal possessions:

The insurance coverage dollar amount would be the lower of the following 2 amounts.

Therefore, Mrs. C can get the reimbursement of $77,000 for the lost belongings.

Mrs. C is eligible for insurance coverage up to $110,000.

(b)

Will Mrs. C be reimbursed in full for her household items:

Yes, as the loss of belongings of $77,000 is less than the eligible amount of $110,000, she could reimburse full for her household items.

Therefore, the answer is Yes.

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