Joe Owned a House That Would Cost $200,000 to Replace

question 74

Essay

Joe owned a house that would cost $200,000 to replace. He took out an insurance policy for only $100,000, reasoning that any damage that would take place would likely be under that amount. In fact, there was a fire and the total loss was $50,000. Indicate what problems Joe might run into when he tries to collect.

---

Definitions:

Parol Evidence Rule

A principle in contract law that prevents parties from presenting extrinsic evidence to alter or challenge the terms of a written agreement.

Merger Clause

A provision in a contract stating that the written document contains the entire agreement between the parties, excluding prior verbal agreements.

Integrated Contracts

Legal agreements that combine all terms and conditions outlined in several related documents into a single, comprehensive document.

First-Assignment-in-Time Rule

A legal principle that gives priority to the first assignee in time when multiple assignments have been made for the same rights or property.