James has his home and personal property insured under a Homeowners 3 (special form) policy. The dwelling is insured for $120,000. The replacement cost of the home is $200,000. Indicate the extent to which each of the following losses would be covered under James's Homeowners 3 policy. (Ignore the deductible.)
a. Lightning strikes the roof of the house and severely damages it. The actual cash value of the damaged roof is $10,000, and it will cost $16,000 to replace the damaged portion.
b. A living room window is broken in a hailstorm. The drapes are water stained and must be replaced. The actual cash value of the damaged drapes is $400. Replacement cost is $600.
c. The water heater explodes and damages some household contents. The actual cash value of the damaged property is $2000, and the cost of replacing the property is $3200.