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1. Alex owns a home with a replacement value of $320,000. The homeowners policy has an 80% coinsurance clause and a face value of $240,000. Damage caused by a fire costs $125,280 to repair. What compensation will the insurance company pay?

1. Alex owns a home with a replacement value of $320,000. The homeowners policy has an 80% coinsurance clause and a face value of $240,000. Damage caused by a fire costs $125,280 to repair. What compensation will the insurance company pay?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. Alex owns a home with a replacement value of $320,000. The homeowners policy has an 80% coinsurance clause and a face value of $240,000. Damage caused by a fire costs $125,280 to repair. What compensation will the insurance company pay? 2. Using Table 19-5 and 19-6, find the annual premium for an automobile insurance policy for Sandra who has a good credit rating. She lives in Territory 1 and buys 50/100/50 coverage for her liability protection. Sandra's vehicle is Model Class 2 and is five years old. In addition to the liability coverage, she purchased comprehensive and collision insurance with a $250 deductible on comprehensive and a $500 deductible on collision. TABLE 19-5 Annual Automobile Liability Insurance Premiums Territory 1 Territory 2 Liability Limits BAD GOOD ОСС GOOD ОСС BAD 50/100/50 385 600 846 354 552 778 100/300/100 425 682 961 391 627 884 250/500/250 460 750 1036 423 690 953 500/1000/500 530 843 1208 488 776 1111 GOOD = good credit; OCC = occasional payments past 30 days; BAD = judgments, collection, bankruptcy "Bodily injury maximum for one person/Total bodily injury coverage per accident/Property damage TABLE 19-6 Annual Auto Insurance Premium Rates for Comprehensive and Collision Territory 1 Comprehensive Collision $0 Deductible $1,000 Deductible BAD Model Vehicle $250 Deductible $500 Deductible Class Age GOOD ОСС BAD GOOD ОСС BAD GOOD ОСС BAD GOOD ОСС 1 0–1 584 934 1129 393 628 759 535 855 1279 471 753 1126 2-3 520 831 1005 350 559 676 449 718 1074 396 633 946 4-5 397 635 768 267 427 516 396 633 946 349 557 833 6+ 374 598 723 252 402 486 332 530 793 292 467 698 0-1 502 803 971 338 540 653 503 804 1202 443 708 1058 2–3 447 715 864 301 481 581 417 667 998 367 587 879 4-5 342 546 660 230 367 444 367 587 878 323 517 773 6+ 321 514 621 216 346 418 297 474 709 261 418 624 3 0-1 472 755 913 318 508 614 478 764 1142 421 672 1006 2-3 420 672 812 283 452 546 392 627 938 345 552 826 4-5 321 513 621 216 345 417 342 547 818 301 481 720 6+ 302 483 584 203 325 393 277 442 661 244 389 582 Territory 2 Comprehensive Collision Model Vehicle $0 Deductible $250 Deductible $500 Deductible $1,000 Deductible Class Age GOOD OCC BAD GOOD OCC BAD GOOD ОСС BAD GOOD ОСС BAD 1 0-1 514 822 994 346 553 668 492 787 1177 433 693 1036 2-3 457 732 884 308 492 594 413 661 988 364 582 870 4-5 349 559 676 235 376 454 364 582 871 321 513 767 6+ 329 526 636 221 354 427 305 488 730 269 430 642 0–1 442 707 854 297 475 574 463 739 1106 407 651 974 2-3 393 629 760 265 423 511 384 614 918 338 540 808 4-5 301 481 581 202 323 391 338 540 807 297 475 711 6+ 283 452 547 190 304 368 273 436 653 240 384 575 3 0–1 415 664 803 280 447 540 440 702 1051 387 619 925 2-3 370 591 715 249 398 481 361 577 863 318 508 760 4-5 283 452 546 190 304 367 315 503 752 277 443 662 6+ 266 425 514 179 286 346 255 407 608 224 358 536 GOOD = good credit; OCC = occasional payments past 30 days; BAD = judgments, collection, bankruptcy
Transcribed Image Text:1. Alex owns a home with a replacement value of $320,000. The homeowners policy has an 80% coinsurance clause and a face value of $240,000. Damage caused by a fire costs $125,280 to repair. What compensation will the insurance company pay? 2. Using Table 19-5 and 19-6, find the annual premium for an automobile insurance policy for Sandra who has a good credit rating. She lives in Territory 1 and buys 50/100/50 coverage for her liability protection. Sandra's vehicle is Model Class 2 and is five years old. In addition to the liability coverage, she purchased comprehensive and collision insurance with a $250 deductible on comprehensive and a $500 deductible on collision. TABLE 19-5 Annual Automobile Liability Insurance Premiums Territory 1 Territory 2 Liability Limits BAD GOOD ОСС GOOD ОСС BAD 50/100/50 385 600 846 354 552 778 100/300/100 425 682 961 391 627 884 250/500/250 460 750 1036 423 690 953 500/1000/500 530 843 1208 488 776 1111 GOOD = good credit; OCC = occasional payments past 30 days; BAD = judgments, collection, bankruptcy "Bodily injury maximum for one person/Total bodily injury coverage per accident/Property damage TABLE 19-6 Annual Auto Insurance Premium Rates for Comprehensive and Collision Territory 1 Comprehensive Collision $0 Deductible $1,000 Deductible BAD Model Vehicle $250 Deductible $500 Deductible Class Age GOOD ОСС BAD GOOD ОСС BAD GOOD ОСС BAD GOOD ОСС 1 0–1 584 934 1129 393 628 759 535 855 1279 471 753 1126 2-3 520 831 1005 350 559 676 449 718 1074 396 633 946 4-5 397 635 768 267 427 516 396 633 946 349 557 833 6+ 374 598 723 252 402 486 332 530 793 292 467 698 0-1 502 803 971 338 540 653 503 804 1202 443 708 1058 2–3 447 715 864 301 481 581 417 667 998 367 587 879 4-5 342 546 660 230 367 444 367 587 878 323 517 773 6+ 321 514 621 216 346 418 297 474 709 261 418 624 3 0-1 472 755 913 318 508 614 478 764 1142 421 672 1006 2-3 420 672 812 283 452 546 392 627 938 345 552 826 4-5 321 513 621 216 345 417 342 547 818 301 481 720 6+ 302 483 584 203 325 393 277 442 661 244 389 582 Territory 2 Comprehensive Collision Model Vehicle $0 Deductible $250 Deductible $500 Deductible $1,000 Deductible Class Age GOOD OCC BAD GOOD OCC BAD GOOD ОСС BAD GOOD ОСС BAD 1 0-1 514 822 994 346 553 668 492 787 1177 433 693 1036 2-3 457 732 884 308 492 594 413 661 988 364 582 870 4-5 349 559 676 235 376 454 364 582 871 321 513 767 6+ 329 526 636 221 354 427 305 488 730 269 430 642 0–1 442 707 854 297 475 574 463 739 1106 407 651 974 2-3 393 629 760 265 423 511 384 614 918 338 540 808 4-5 301 481 581 202 323 391 338 540 807 297 475 711 6+ 283 452 547 190 304 368 273 436 653 240 384 575 3 0–1 415 664 803 280 447 540 440 702 1051 387 619 925 2-3 370 591 715 249 398 481 361 577 863 318 508 760 4-5 283 452 546 190 304 367 315 503 752 277 443 662 6+ 266 425 514 179 286 346 255 407 608 224 358 536 GOOD = good credit; OCC = occasional payments past 30 days; BAD = judgments, collection, bankruptcy
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