Question

Joe has a Dwelling "DP-3" policy covering one of his rental properties, with Coverage A limits of $75,000 and a deductible of $500. A tornado severely damages the house and it takes 3 months for repairs, during which time Joe loses his tenant and monthly rental income of $750.00. How much, if any, will Joe's policy pay for the lost rents under Fair Rental Value coverage?

(A) $15,000

(B) $ 1,750

(C) $ 750

(D) $ 2,250

Answer 1

Joe's policy will pay for the lost rents under Fair Rental Value coverage, but without additional information, it is not possible to determine the exact amount.

Step-by-step explanation:

Joe's policy will pay for the lost rents under Fair Rental Value coverage. Fair Rental Value coverage typically provides reimbursement for the rental income lost as a result of a covered peril, such as a tornado. The coverage amount is usually a percentage of the rental income and is subject to a maximum limit.

In this case, Joe's monthly rental income is $750 and the policy will typically cover a percentage of that amount. Since the question does not provide information about the specific percentage, we cannot calculate the exact amount of reimbursement. However, options (A) $15,000, (B) $1,750, (C) $750, and (D) $2,250 are all plausible options based on different percentage scenarios.

Therefore, without additional information, it is not possible to determine the exact amount Joe's policy will pay for the lost rents under Fair Rental Value coverage.