What is the maximum payout for a detached garage destroyed by fire if a homeowners policy is written for $100,000?

The correct answer is based on the typical coverage limits found in homeowners insurance policies. In most standard homeowners policies, there is a limit on the coverage for detached structures, which is usually a percentage of the total dwelling coverage. Specifically, many policies provide coverage for detached garages and other outbuildings up to 10% of the dwelling coverage.

In this scenario, if the homeowners policy is written for $100,000, the maximum coverage limit for detached structures like a garage would be calculated as 10% of that amount. Therefore, 10% of $100,000 equals $10,000. This means that if a detached garage were to be destroyed by fire, the maximum payout would be $10,000, which aligns with the answer selected.

Understanding this aspect of homeowners policies helps clarify the limitations on coverage for structures that are not attached to the main dwelling and underscores the importance of reviewing coverage amounts in policy documents.