Underinsured Dwelling

Tom carries an H0-3 policy with $300,000 of coverage and a $3,500 deductible. It would cost $500,000 to rebuild Tom’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Tom’s kitchen?

1. $68,000
2. $71,500
3. $96,500
4. $100,000