Joe has DP-3 policy with $80,000 Coverage A ... What is not covered and why?
John, I struggled with this one too. The building is covered (forgetting deductibles for now). The furniture is covered as "personal effects", and the loss of rent is covered. The building is at the limit of the coverage, and the other two coverages are below their limits, so:
80000 building, +2000 furniture + 2000 loss of rental = 84000. I don't think the shed is covered.
I think
Let's see if someone verifies this.
The question does not show to whom the furniture belongs. It is my opinion, therefore, that since this dwelling is rented out, Coverage C Exclusions #6 and/or #7 apply - No coverage for the furniture. Buil;ding, rental value and shed are covered.
Coverage B must be selected when the coverage is purchased in order for the coverage to be applied to a loss; however, I would not assume that the insured did not have this coverage just because it isn't indicated in the question. If the insured has a reason to carry Coverage B, I would assume that he had the required coverage. On the other hand - how do we know the furniture belongs to the insured if they were renting the dweliing?
My point is that this a weak question that leaves the correct answer open to assumption. I think that everyone who 'chimed-in' on this question has the right idea. AND by the way, the 17th edition of the manual does state that "d" is the correct answer. This answer was changed in the 18th edition. I'll email my contact at the state and ask the reasoning behind this question. If I get an answer any time soon, I'll let you know.
Hello all...new information on question 24 in the state manual...
I spoke to the person who actually had the answer changed (corrected) from the 17th edition. I need to correct my previous response. Although Coverage B is optional, it does NOT have to be selected in order to be applied to a loss. It is "automatically" applied when it is needed - whether the insured selects or not.
On the other hand Coverage C must be selected. In this case it appears that the furnishings did not belong to the insured since the dwelling was rented. The question does not mention Coverage C, so the furniture loss is not a covered loss.