1. What is the mortgage clause in the HO-3 policy?
2. Ms. Gotcheaux’s home in San Francisco was damaged by an earthquake. The earthquake caused a gas line to explode and a fire broke out, completely destroying the house. Ms. Gotcheaux’s homeowners policy explicitly excludes coverage for any damage caused by earth movement. Nevertheless, she files a claim with her insurer under her HO-3 policy. As Ms. Gotcheaux’s insurer, how would you handle her claim?
3. Brenda Joy is an accountant in a small Kansas town. She works out of her home, which has a replacement value of $125,000 and an actual cash value of $105,000. Brenda purchased an HO-3 with the following limits:
Coverage A: $110,000, $250 deductible
Coverage E: $300,000
Coverage F: $5,000