Homeowner's Insurance
Outlined below is Mike and Rachel Marshal's homeowner's insurance policy.
Use the outline and the property insurance information on the following page to answer
the questions at the bottom of the page.
Great Northern Insurance Company
Coverage Limit of Liability
Dwelling ($100 deductible) ..................................................................... $90,000.00
Appurtenant Structures ($100 deductible) ........................................... 9,000.00
Unscheduled Personal Property ($100 deductible) ............................... 45,000.00
Additional Living Expense (Loss of Use) .............................................. 24,000.00
Personal Liability (Each Occurrence) .................................................... 300,000.00
Medical Payments to Other (Each Person) ........................................... 1,000.00
Physical Damage to Property of Others (Each Occurrence) ................ 100,000.00
1. If there was a fire in which the house and all their personal property was
destroyed, how much would the insurance company pay?
2. What is the maximum amount they would receive if their unattached garage
burned?
3. If the postman was injured on their icy steps and won a lawsuit for $75,000, how
much would they have to pay out of their pocket?
4. If their house, personal property, and garage are all destroyed in a flood. How
much will they receive from the insurance company?
5. If one of their trees falls in a windstorm and does $3,000 damage to the
neighbor’s car, which coverage (if any) will pay for the damage?
6. A neighbor broke his leg helping Mike move a piano into the house. He does not
sue, but Mike and Rachel feel they should pay the medical bills. If the total bill is
$1,350, how much will they have to pay themselves?
Dwelling Coverage will pay for damage to the policyholder’s house caused by a
number of different perils including fire, lightning, windstorm, and vandalism.
The coverage includes a policy deductible which requires the policyholder to assume a
portion of the cost of the loss. Examples of common deductibles are $100 and $250.
Appurtenant Structures Coverage will pay for damage to buildings and structures on
the policyholder’s property that are not attached to the house such as garages and tool
sheds. Appurtenant structures are normally insured for up to one tenth of the amount of
dwelling coverage, but larger amounts can be purchased. The coverage includes a
policy deductible which requires the policyholder to assume a portion of the cost of the
loss.
Unscheduled Personal Property Coverage will pay for theft of or damage to the
policyholder ’s personal property such as furniture, appliances, and clothing.
Personal property is normally insured for up to fifty percent of the amount of the
dwelling coverage, but larger amounts can be purchased. This coverage includes a
policy deductible which requires the policyholder to assume a portion of the cost of the
loss. Several types of personal property will not be covered or will have limited
coverage. A complete list of these items will be included in the policy. Items not covered
as unscheduled personal property should be listed (scheduled) and insuredseparately
such as antiques, collections, and valuable jewelry.
Additional Living Expense (Loss of Use) will pay for the reasonable increase in living
expenses in alternate housing while your house is being repaired or rebuilt. The amount
of this coverage is normally up to twenty percent of the amount of dwelling coverage.
Personal Liability Coverage will help pay for the cost of property damage or injury to
others. It entitles the policyholder to legal defense by the insurance company and the
payment of damages up to the limit of liability purchased.
Medical Payments To Others will pay for the medical costs of minor injuries to other
people. Payment is made regardless of whom is at fault.
Physical Damage To Property Of Others will pay for the cost of minor damages to
other people's property. Payment is made regardless of whom is at fault.