The Replacement Cost of a Home Covered Under the HO-3

Multiple Choice

The replacement cost of a home covered under the HO-3 policy is $100,000. Assume the home is insured for $50,000 and a $10,000 loss occurs (replacement cost) . Also assume depreciation is set at 10 percent. Assume that there is no deductible. How much will the insured recover if repaired?

A) $9,000
B) $10,000
C) $8,000
D) $6,250