Question

Rosa's barn burned down when it was struck by lightning during a storm. The barn was fully insured at replacement cost under Rosa's Farm policy. At the time of the loss, the barn was valued at $45,000, but it will cost $60,000 to replace it. How will Rosa's insurer respond to her claim?

A. The insurer will pay Rosa $30,000 first, and then up to another $30,000 once repairs are complete
B. The insurer will give Rosa one check for $45,000
C. The insurer will give Rosa one check for $60,000
D. The insurer will pay Rosa $45,000 first, and then up to another $15,000 once repairs are completed

Answer 1

The insurer will give Rosa one check for $60,000.

Step-by-step explanation:

The insurer will give Rosa one check for $60,000.

In this scenario, Rosa's barn was fully insured at replacement cost. The insurance policy covers the cost of replacing the barn, so the insurer will give her a check for the full amount required to replace the barn, which is $60,000.

This means Rosa will be able to use the $60,000 check to rebuild her barn and cover the cost of repairs.