Question

Your home insurance provides for replacement value for personal property losses. Your china hutch was vandalized and completely destroyed. Your hutch cost $400 four years ago, but a new one will cost you $600. How much will the insurance company pay?

A) $400
B) $200
C) $600
D) Nothing, vandalism is not covered.

Answer 1

The insurance company will pay the replacement value of the destroyed china hutch, which is the cost of a new one. In this case, the insurance company will pay $600.

Step-by-step explanation:

The insurance company will pay the replacement value of your china hutch, which is the cost of a new one. In this case, a new hutch will cost you $600. Since your insurance policy provides for replacement value coverage, the insurance company will pay the full cost of the new hutch, which is $600.