Reference no: EM132398453

Josie and Juan are married and own a home insured for $250,000 under an unendorsed HO-3 policy. The replacement cost of the home is $400,000. Personal property is insured for $90,000. Josie has jewelry valued at $25,000. Juan has a gun collection valued at $18,000 and a motorboat valued at $30,000.

1. Assume you are a financial planner who is asked to evaluate the couple's HO-3 policy. Based on the facts given, do you believe that Josie and Juan's coverages are adequate? If not, make several recommendations for improving the coverage.
2. A fire damaged kitchen and one bedroom of the home. The actual cash value of the loss is $25,000. The cost of repairs is $22,000. How much will the insurer pay for the loss?
3. A burglar broke into the home and stole a new television, jewelry, and several paintings. The actual cash value of the stolen property is $6,500. The cost of replacing the property is $12,000. In addition, the gun collection was taken. Indicate the extent, if any, to which an unendorsed HO-3 policy will cover these losses.
4. Assume that Josie and Juan have a disagreement with their insurer concerning the value of the aforementioned losses. How would the dispute be resolved under their HO-3 policy?
5. Assume that Josie operates a consulting business from the home. Her home business office contains a computer used solely for business, office furniture, file cabinets, and other business personal property. Explain whether her HO-3 policy would cover business personal property used in a home business.