Carl and Alexandra Purchased a $200,000 Homeowners Policy for Their

question 172

Multiple Choice

Carl and Alexandra purchased a $200,000 homeowners policy for their house in 1988.They have renewed the policy each year since and have replacement coverage.This policy has a $1,000 deductible.Their home now has a replacement value of $275,000.Last week they came home to find a small fire which caused the following damages:
Assume Carl and Alexandra have a standard HO-3 policy with personal property covered at 50% and landscaping covered for 10%.How much will the insurance pay for the losses of their personal property and landscaping?

• A) $15,000
• B) $ 9,700
• C) $24,545
• D) $27,000
• E) $30,000

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Definitions:

Insight

A deep understanding of a person or situation, often resulting in a clear and sometimes sudden discernment of a solution to a problem.

Fixation

An obsessive focus or attachment to certain behaviors, people, or developmental stages, often hindering emotional development.

Mental Set

A cognitive tendency to approach situations in a fixed way based on previous experiences, potentially inhibiting problem-solving.

Confirmation Bias

The bias towards selecting, decoding, favoring, and reminiscing over data that corroborates one's prior beliefs or conjectures.