Question

Referring to the facts stated in the last scenario, The fire loss results in a repair appraisal of $180,450 on a building that has a replacement cost value of $250,000. The building has been condemned by the County and must be totally demolished. Clean up and removal of existing fire debris will cost $17,500. How much will the Masterminds policy pay?

(A) The coverage limit for this new location is $100,000 and that is all that the policy will pay.

(B) Nothing. The fire that destroyed the building was initially caused by a fire at an adjacent building. Masterminds needs sue that building owner to recover any damages it incurs.

(C) Since the location is condemned, the building is a total loss, and the valued policy law will require payment of $250,000 for the dwelling. An additional $10,000 is also available for debris removal.

(D) Nothing. Since the building was not added to the policy before the loss, there is no coverage.

Answer 1

The Masterminds insurance policy payout will depend on the specific terms and coverage limits. Option (A) could be correct if the insurance policy only covers up to its set limit of $100,000, and options (B), (C), and (D) all present alternative scenarios based on different assumptions about the insurance coverage.

Step-by-step explanation:

To address the schoolwork question regarding the payment that Masterminds policy will pay in a scenario where the building has been condemned and must be demolished, we must consider the conditions and coverage limits set by the insurance policy. The information given outlines a situation where a fire loss leads to a repair appraisal of $180,450 on a building with a replacement cost of $250,000, including additional costs for debris removal.

Option (A) suggests that the insurance will cover up to the policy limit of $100,000, not considering other stipulations. Option (B) posits that no payout will be received and that recourse must come from suing the owner of the building where the fire started. Option (C) implies that due to the condemnation of the building, the payout would be the total replacement cost plus an additional amount for debris removal. Option (D) suggests there would be no coverage if the building was not on the policy before the loss.

Without specific policy details, it's not possible to provide a definitive answer, but a general understanding of insurance principles indicates that the policy limit is typically the maximum payout amount unless otherwise specified in a valued policy law or other special provisions.