Assuming (1) it would certainly set you back $200,000 to replace your home, (2) it is insured for $160,000 (80% of its replacement value), (3) you do not have an insurance deductible on your plan and also (4) a fire triggers $40,000 worth of damages, after that your insurance policy business will pay $40,000 to fix the cost of the insurance claim at the substitute cost under the plan (low cost
