Final answer:
The homeowners policy would generally pay the actual cash value of the lost item from a pair, taking depreciation into account. Specific coverage can vary by policy, so it's crucial for policyholders to understand their policy terms. Mechanisms like deductibles and coinsurance help reduce moral hazard by involving the policyholder in the financial risk.
Step-by-step explanation:
The question pertains to how much a homeowners policy would pay out for the loss of one of a pair of golden candlesticks. Generally, the contents coverage in a homeowners policy pays for the actual loss sustained. This means if one item of a matched set is lost or damaged, the policy would typically cover the actual cash value of the lost or damaged item rather than the replacement cost of the entire set. The actual cash value considers depreciation, so the amount the policy pays out may not be sufficient to purchase a new, similar item.
It's important to note that insurance policies can differ, and some may offer replacements for the pair or a comparable substitute. Therefore, it's crucial for policyholders to review their specific policy details.
For reducing moral hazard, which is the risk of someone acting differently because they are insured, policies have certain mechanisms like deductibles, copayments, and coinsurance. These require the insured party to share in the financial burden of a loss, creating an incentive for them to prevent losses.