Joe owns a house on which he carries a $400,000 HO-3 policy. The replacement cost of the house is $600,000. A fire loss occurs that has a replacement cost of $10,000. How much can Joe collect under his HO-3 policy?

Question

Quizplus · Accepted Answer

The amount of insurance coverage on the house is irrelevant when determining the amount that can be collected for a fire loss. The maximum amount that can be collected for a $10,000 fire loss on an HO-3 policy is typically limited to the policy's deductible. Therefore, Joe can collect $10,000 - $1,667 (assuming a typical 5% deductible) = $8,333.

Joe Owns a House on Which He Carries a $400,000