Personal Liability

InstructionsPlease post your answer to the question below directly beneath the question.   Then, post a comment to at least one answer posted by a classmate.   You must post your own answer before seeing those of your classmates.  When you respond to a classmate’s answer, please identify that classmate in your response.BackgroundFred and Susan Melrose insured their home and personal property under an unendorsed Homeowners 3 policy. The home has a current replacement cost of $800,000.  The policy contains the following limits:⦁ Coverage A – Dwelling                                 $480,000⦁ Coverage B – Other Structures                      $48,000⦁ Coverage C – Personal Property                  $240,000⦁ Coverage D – Loss of Use                              $144,000⦁ Coverage E – Personal Liability                     $100,000 (Each Occurrence)⦁ Coverage F – Medical Payments to Others     $1,000 (Each Person)                              QuestionsWhat dollar amount, if any, is payable under their Homeowners 3 policy for the following losses.  Treat each loss as a separate occurrence. Ignore any deductible.  Please show your calculations. If the loss is covered, you must indicate under which coverage(s) the claim would be paid, and show your calculations.  If a loss is not covered, you must indicate why the loss is not covered.⦁ Three bedrooms and the attached garage were totally destroyed in the fire. The replacement cost of restoring the bedrooms and the garage is $120,000.  The actual cash value of the loss is $100,000.  Please show your calculations.⦁ The fire destroyed all the furniture in the three bedrooms. The furniture was 5 years old and was 50% depreciated.  When the furniture was five years ago, it cost $30,000.  Today, the cost to replace the furniture today is $50,000.  Please show your calculations.⦁ The Melrose’s family car, which was stored in the garage, is also a total loss. The family car has a replacement cost of $30,000 and an actual cash value of $25,000.⦁ The furnished apartment above the garage, which the Melrose family had been renting to a visiting professor, suffered extensive smoke damage from the fire. It took three months to clean-up the smoke damage.  During these three months, the tenant was not required to pay the rent of $800 per month. In addition, the apartment’s furnishings were completely ruined by the smoke damage.  The furniture has an actual cash value of $7,500 and a replacement cost of $10,000.⦁ While the garage was being repaired, the family motor boat had to be stored in the driveway. It was totally destroyed by a severe wind and hail storm. The actual cash value of the motorboat was $12,000.  The replacement cost is $18,000.


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