Question

How much coverage would be provided under a standard homeowner's policy if during an unusually heavy rain the basement becomes full of water and an antique dresser from the 1860s was destroyed? The dresser was originally purchased for $1,300 10 years ago, was recently appraised for $2,600, and you recently received an offer from an antique collector for $3,100. How much would be received from your insurance company to cover this loss?

A) zero
B) $1,300
C) $2,600
D) $3,100

Answer 1

Under a standard homeowner's policy, the insurance company would likely pay the actual cash value (ACV) of the antique dresser which would be $2,600.

Step-by-step explanation:

Under a standard homeowner's policy, the coverage provided for personal property, such as the antique dresser, would typically be based on the actual cash value (ACV) of the item at the time of loss. The ACV is determined by considering the original purchase price, recent appraisals, and comparable market values. In this case, the dresser was purchased for $1,300, recently appraised for $2,600, and an offer of $3,100 was received from an antique collector.

Insurance policies may vary, but typically, the insurance company would pay the ACV of the item, which in this case would be $2,600.

Therefore, the answer would be C) $2,600.