Latisha's home, insured with a Dwelling Form flood policy for $150,000, suffers flood damage. Her detached garage also sustains $25,000 in damage. According to her policy, what is the maximum amount Latisha can receive for the damage to her detached garage? (Disregard deductibles.)

Rationale

Latisha can receive a maximum of $15,000 for the damage to her detached garage.

In a Dwelling Form flood policy, coverage is typically limited to the insured structure itself and does not extend to detached structures unless specifically stated. Latisha's policy covers her home for $150,000, but the detached garage is subject to a lower coverage cap, usually set at 10% of the primary dwelling's coverage amount.

A ($150,000) YOUR ANSWER

This choice reflects the total coverage for Latisha's home rather than the amount applicable to her detached garage. The maximum limit for a detached structure is generally a percentage of the dwelling coverage, making this option incorrect for the garage damage.

B ($15,000) CORRECT

This is the correct answer, representing 10% of the $150,000 dwelling coverage. In standard flood policies, detached structures like garages are typically insured for a fraction of the main dwelling's total coverage, allowing Latisha to claim up to $15,000 for the damages incurred.

C ($25,000) YOUR ANSWER

While this amount corresponds to the total damage incurred on the detached garage, it exceeds the policy limit for detached structures as defined by the Dwelling Form flood policy. Thus, Latisha cannot claim this full amount due to the specific coverage limitations.

D ($0) YOUR ANSWER

This option incorrectly implies that no coverage is available for the detached garage. Although coverage may be limited, there is still a defined amount available under the policy, which is $15,000, hence this choice is incorrect.

Conclusion

Latisha's Dwelling Form flood policy provides a maximum of $15,000 for damage to her detached garage, reflecting standard coverage limits for such structures. The confusion often arises from the overall dwelling coverage amount, but it is essential to note that specific limits apply to detached properties, ensuring that the policy's provisions are clearly understood.

Latisha's home, insured with a Dwelling Form flood policy for $150,000, suffers flood damage. Her detached garage also sustains $25,000 in damage. According to her policy, what is the maximum amount Latisha can receive for the damage to her detached garage? (Disregard deductibles.)

Latisha can receive a maximum of $15,000 for the damage to her detached garage.

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