The 80% Coinsurance Clause in a Homeowner's Policy Would Cause

question 53

Multiple Choice

The 80% coinsurance clause in a homeowner's policy would cause a reduction in the claim payment for a covered loss to the dwelling of $30,000 in which of the following cases:

• A) dwelling limit of $75,000,replacement cost of dwelling $90,000,actual cash value of dwelling $85,000
• B) dwelling limit of $75,000,replacement cost of dwelling $100,000,actual cash value of dwelling $90,000
• C) dwelling limit of $90,000,replacement cost of dwelling $90,000,actual cash value of dwelling $90,000
• D) dwelling limit of $110,000,replacement cost of dwelling $110,000,actual cash value of dwelling $90,000
• E) dwelling limit of $120,000,replacement cost of dwelling $100,000,actual cash value of dwelling $90,000

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's profits and losses.

Dividends Received

Payments shareholders receive from a company’s earnings, typically distributed in cash or additional stocks.

Investment Revenue

Investment revenue is income generated from various types of investments, including dividends from stocks, interest on bonds, or income from rental properties.

Equity Method

The equity method is an accounting technique used to record investments in other companies, typically reflecting the owning company's fair share of the investee's net income.