A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $100,000 at the time the roof was destroyed by a windstorm.The actual cash value of the loss was $9,000,but it will cost $12,000 to replace the roof.Ignoring any deductible,what will the insurer pay to settle this loss?

Question

Quizplus · Accepted Answer

The policy limit of $100,000 is greater than the actual cash value of the loss, so the insurer will pay the actual cost to repair or replace the damaged property, up to the policy limit. Since it will cost $12,000 to replace the roof and the policy limit is $100,000, the insurer will pay the full $12,000 to settle the loss.

A Dwelling with a Replacement Cost of $150,000 Was Insured