When a deer damages Mr. Simpson's home, how is the claim on the dwelling impacted?

The correct choice indicates that the claim must be paid for replacement cost, which aligns with typical homeowners’ insurance policies offering coverage for damages caused by animals, including deer, as long as these incidents are not specifically excluded in the policy.

Under a replacement cost policy, the insurance will cover the cost to repair or replace the damaged property with materials of similar kind and quality without deducting for depreciation. This means Mr. Simpson would receive funds sufficient to restore his home to its previous condition before the deer incident, assuming he has this level of coverage in his policy.

It is essential for policyholders to understand the terms of their coverage, including coverage types such as actual cash value and replacement cost, as these will significantly affect how claims are handled. Policies often exclude certain perils, however, animal-related damages generally are not one of those common exclusions. Understanding these details can help ensure clients recognize the full extent of their protection under their homeowners’ insurance policy.