Question

When a flood inundates Paul's property, it causes $190,000 in damage to his home and $18,000 in damage to his detached garage. Paul has a Dwelling Form flood policy with a $200,000 limit. How much coverage should Paul use for his garage if he wants to have enough coverage to repair his home completely?

Option 1: $10,000
Option 2: $18,000
Option 3: $20,000
Option 4: $200,000

Answer 1

Paul should use $10,000 for his garage if he wants to have enough coverage to repair his home completely.

Step-by-step explanation:

To repair his home completely, Paul needs coverage for the full amount of the damage, which is $190,000 for his home. Since his Dwelling Form flood policy has a limit of $200,000, he should use $190,000 for his home.

For his garage, the damage is $18,000. Since the policy limit is $200,000, he can use the remaining amount of coverage, which is $200,000 - $190,000 = $10,000 for his garage.

Therefore, Paul should use $10,000 for his garage if he wants to have enough coverage to repair his home completely.