Assume Bill Clanton owns the ISO HO-2 policy described in this chapter and reproduced in Appendix A. The limits are as follows: A = $ 120,000 B = $ 12,000 C = $60,000 D = $ 24,000 E = $ 100,000 F = $5,000 A $250 deductible applies to Section 1, Coverages A through D. The replacement cost of Bill's home is $130,000, the contents are valued at $70,000, and the home is 30 percent depreciated. Your assignment is to compute the amount Bill will collect in each of the following circumstances. (Assume each event occurs separately.) A. Bill's house and all its contents are destroyed by a tornado. It takes six months to rebuild the home, and Bill's additional living expenses amount to $12,000. B. A neighbor's eight-year old child accidentally releases the brakes on his family's pick-up truck, sending it crashing into Bill's home. Damage to the home amounts to $15,000. The truck is destroyed. Its actual cash value before the loss was $22,000. The child and Bill both suffer a broken arm. Medical expenses amount to $5,000 for each person. C. Bill's unattached tool shed burns, destroying the shed (damage = $7,000) and the lawn-care equipment inside (damage = $3,000). D. Bill negligently starts a fire while cooking. His home and all the contents are a total loss. It costs Bill an additional $14,000 to live in a rental home while his house is being rebuilt. E. While playing golf, Bill's ball hits another golfer in the head. Bill yelled a warning before the victim, Bob, was hit. Bob claims not to have heard the warning, and sues Bill for $60,000 in medical expenses, $6,000 in lost wages (because he couldn't perform his work for three months), and $100,000 for pain and suffering. Assume Bob wins the case, and it costs an additional $20,000 to provide Bill with a legal defense. F. While his daughter is away at college, her stereo is stolen from her dorm room (damage = $1,500).
A=$120,000B=$12,000C=$60,000D=$24,000E=$100,000F=$5,000 A $250 deductible applies to Section I, Coverages A through D. The replacement cost of Bill's home is $130,000, the contents are valued at $70,000, and the home is 30 percent depreciated. Your assignment is to compute the amount Bill will collect in each of the following circumstances. (Assume each event occurs separately.) A. Bill's house and all its contents are destroyed by a tornado. It takes six months to rebuild the home, and Bill's additional living expenses amount to $12,000. B. A neighbor's eight-year old child accidentally releases the brakes on his family's pick-up truck, sending it crashing into Bill's home. Damage to the home amounts to $15,000. The truck is destroyed. Its actual cash value before the loss was $22,000. The child and Bill both suffer a broken arm. Medical expenses amount to $5,000 for each person. C. Bill's unattached tool shed burns, destroying the shed (damage =$7,000 ) and the lawn-care equipment inside (damage =$3,000 ). D. Bill negligently starts a fire while cooking. His home and all the contents are a total loss. It costs Bill an additional $14,000 to live in a rental home while his house is being rebuilt. E. While playing golf, Bill's ball hits another golfer in the head. Bill yelled a warning before the victim, Bob, was hit. Bob claims not to have heard the warning, and sues Bill for $60,000 in medical expenses, $6,000 in lost wages (because he couldn't perform his work for three months), and $100,000 for pain and suffering. Assume Bob wins the case, and it costs an additional $20,000 to provide Bill with a legal defense. F. While his daughter is away at college, her stereo is stolen from her dorm room (damage =$1,500)
