During the holidays, Andy and Emily Daniels Christmas tree caught fire, and they sustained significant damage to their home and personal property. They had to clean and repaint their living room and replace the living room carpet and furniture for $7,000. While the work was being done, the family stayed in a hotel for three days, at a total cost of $300. The Daniels had an actual cash value homeowners's insurance policy with a deductible of $250. The insurance company's adjuster came to the Daniels home and looked at the damage. He estimated the actual cash value of the furniture, hand-me-downs from Emily's parents, at $750 and of the carpet, which had needed to be replaced for some time, at $350.
a) How much do you estimate the insurer will pay the Daniels?
b) If the Daniels had purchased replacement cost insurance, how much would they have received from their insurer after the loss?
During the holidays, Andy and Emily Daniels Christmas tree caught fire, and they sustained significant damage to their home and personal property. They had to clean and repaint their living room and replace the living room carpet and furniture for $7,000. While the work was being done, the family stayed in a hotel for three days, at a total cost of $300. The Daniels had an actual cash value homeowners's insurance policy with a deductible of $250. The insurance company's adjuster came to the Daniels home and looked at the damage. He estimated the actual cash value of the furniture, hand-me-downs from Emily's parents, at $750 and of the carpet, which had needed to be replaced for some time, at $350.
a) How much do you estimate the insurer will pay the Daniels?
b) If the Daniels had purchased replacement cost insurance, how much would they have received from their insurer after the loss?
