Pritika and Allan bought a home built in the 1880's in a small town for $85,000 that would cost $235,000 to rebuild if destroyed because of the ornate molding and windows. What type of Homeowners policy would BEST cover their needs if Pritika and Allan would be willing to rebuild the home with functionally equivalent materials and modern techniques?

a. HO-3

b. HO-5

c. HO-2

d. HO-8

Answer: D

Homeowners Policy

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An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

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An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

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