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Principles of Risk Management and Insurance, 13th Edition by Michael McNamara, George E. Rejda

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Application Questions

  1. Carolyn owns a home with a replacement cost of $400,000 that is insured under a Homeowners 3 policy for $280,000. The roof was badly damaged in a severe windstorm, and it will cost $20,000 to repair the roof. The actual cash value of the loss is $10,000. Ignoring any deductible, how much will Carolyn collect from the insurer?

  2. Michelle purchased a Homeowners 3 policy with no special endorsements to cover her home and personal property. A fire occurred and destroyed a big-screen television. Michelle paid $4,000 for the new TV, and it was 25 percent depreciated when the fire occurred. The replacement cost of a similar television is $3,800. Ignoring any deductible, how much will Michelle collect for the loss?

  3. Martin and Carrie ...

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