How much will Sally's HO-3 insurer pay to replace the blueprints valued at $10,000?

The correct answer is that the HO-3 insurer will pay $0 for the blueprints valued at $10,000 because standard homeowners policies, including HO-3, typically do not cover the cost of replacing blueprints or plans. Homeowners insurance typically focuses on covering physical damages to the structure and personal property due to covered perils, but it generally excludes certain types of property and costs such as those associated with blueprints or plans.

In this case, blueprints are not considered a direct physical loss; hence, they fall outside the coverage parameters set forth in the typical HO-3 policy. Therefore, Sally would not receive any reimbursement for the blueprints under the terms of her homeowners insurance policy. This underscores the importance for policyholders to be aware of what specific items and types of damages are covered under their insurance policies, particularly for specialized items like blueprints that may require separate coverage.