David has a Homeowners 3 policy that provides $280,000 of insurance on

David has a Homeowners 3 policy that provides $280,000 of insurance on his dwelling, which has a current replacement value of $400,000.

Ignoring any deductible, how much will David collect if a roof with a replacement value of $16,000 but an actual cash value of $10,000 is destroyed in a fire?
A) $10,000
B) $12,000
C) $14,000
D) $16,000

ANSWER

Answer: C