Asked by Angel Castillo on May 17, 2024
Verified
In 2001,Tom purchased a home with a fair market value of $100,000.At the same time,he also purchased a valued policy with a face amount of $100,000 to insure the house against various risks,including fire.In 2002,the house was destroyed by fire.The fair market value of the house at the time of the fire was $150,000.What is Tom entitled to under the policy?
A) $100,000
B) $150,000
C) $250,000
D) Nothing
Valued Policy
An insurance policy that pays a predetermined amount to the insured in the event of a total loss, regardless of the value of the lost property.
Fair Market Value
The price that property would sell for on the open market between a willing buyer and a willing seller.
Insure The House
Entering into a policy agreement with an insurance company to provide protection against damages or losses to one's home, typically against risks like fire, theft, or natural disasters.
- Understand the circumstances under which insurers are obligated to pay or deny claims and the implications for policyholders.
Verified Answer
Learning Objectives
- Understand the circumstances under which insurers are obligated to pay or deny claims and the implications for policyholders.
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