MANAGEMENT
Activity 6.4.docx

# Activity 6.4.docx - Answer the following 1 Computing Actual...

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Answer the following: 1. Computing Actual Cash Value Coverage. What amount would a person with actual cash value (ACV) coverage received for two-year-old furniture destroyed by a fire? The furniture would cost \$1,000 to replace today and had an estimated life of five years. 1,000/5=200x3= \$600 2. Computing Claims. When Carolina’s house burned down, she lost household items worth a total of \$50,000. Her house was insured for \$160,000 and her homeowner’s policy provided coverage for personal belongings up to 55 percent of the insured value of the house. Calculate how much insurance coverage Carolina’s policy provides for her personal possessions and whether she will receive payment for all of the items destroyed in the fire. 160,000x.55= \$88,000 Because she had \$50,000 of lost items and a limit of \$88,000 she should receive payment for all the items destroyed. 3. Calculating Auto Liability Claim Coverage. Becky Fenton has 25/50/10 automobile insurance coverage. If two other people are awarded \$35,000 each for injuries in an auto accident in which Becky was judged at fault, how much of this judgment would the insurance cover? Becky’s coverage is \$25,000 per person and \$50,000 per accident. In this case her insurance would cover \$25,000 of the \$35,000 for each of the injured persons for a total of \$50,000 covered. This would result in (35,000-25,000)2 =\$20,000 that Becky would owe that her insurance would not cover.

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• Summer '13
• N/A
• HMO, Ronald Roth, health insurance options

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