the brown family just bought a home for $300,000. of that amount, the land is valued at $50,000. how much…

the brown family just bought a home for $300,000. of that amount, the land is valued at $50,000. how much would the browns have to carry in homeowners insurance in order to collect the full amount from a fire that caused $50,000 in damages?\na. $200,000\nb. $160,000\nc. $50,000\nd. $120,000

the brown family just bought a home for $300,000. of that amount, the land is valued at $50,000. how much would the browns have to carry in homeowners insurance in order to collect the full amount from a fire that caused $50,000 in damages?\na. $200,000\nb. $160,000\nc. $50,000\nd. $120,000

Answer

Explanation:

Step1: Determine value of the structure

Home value is $300,000 and land value is $50,000. Structure value = Home value - Land value. $300000 - 50000=250000$

Step2: Analyze insurance need for $50,000 damage

To collect full $50,000 for damage, insurance should cover at least the value of the structure that can be damaged. Since the damage amount is $50,000, and as long as the insurance amount is at least equal to the value of the structure relevant to the damage situation, they can collect the full amount. Here, the relevant value for damage - collection is the value of the structure. And the structure value is $250,000, but since the damage is $50,000, they need to have insurance of at least $50,000 to collect the full $50,000 for the damage.

Answer:

C. $50,000