CAS Exam 5 - Question 16

[gelby]

This was the question about calculating loss of use coverage for Bonnie, who has to move into a hotel. They give us two columns of expenses (one for normal and one for hotel). They contain rent, utilities, phone, laundry, and food.

The example given in the syllabus reading shows all of the above expenses except food. If you include food, the answer is $140 (choice C). If you don't include food, the answer is $65 (choice B).

I assumed food should be included (assuming she is spending more because she doesn't have access to her own kitchen).

Which is right?

[jets fan]

The conclusion on the CAS Board's thread (http://www.casact.org/students/forums/cgi-bin/ultimatebb.cgi?ubb=get_topic&f=9&t=000110) is that food is included (ie the answer is 'C'). I don't have a text reference, other than the CSM desciption I included in that thread. An intuitive explanation might be that if you're living in a hotel, you can't really cook for yourself, hence you have to eat-out more often. This means your food expenses will be greater than if you live at home, therefore you should be compensated for the difference, to be made whole.