Question

Christina owns a home insured by a $200,000 DP-3 policy. When she purchased the home, she fixed up the detached garage, turning it completely into a studio apartment, which she now rents out. One day, a fierce windstorm blows the roof off her home and the studio rental. How much of her detached garage will be covered under this DP-3 policy?

A. 10% under coverage B
B. $0
C. Up to $50,000
D. $200,000 maximum for both structures

Answer 1

Christina's DP-3 home insurance policy covers her detached garage at 10% under Coverage B, amounting to a maximum of $20,000 for the repairs after windstorm damage. The correct answer is A. 10% under Coverage B of her policy.

Step-by-step explanation:

The student asked how much of the detached garage, which Christina converted into a studio apartment and now rents out, would be covered under her $200,000 DP-3 policy after it was damaged by a windstorm.

The correct answer is A. 10% under Coverage B of her policy. This is because DP-3 policies typically cover detached structures under Coverage B, which is generally limited to 10% of the Coverage A limit, which in this case is the $200,000 insured value of Christina's home. Therefore, up to $20,000 would be available to cover the damage to her detached garage turned studio.