Question

Beth insures her $100,000 house with a 80/20 homeowner's policy. She has a fire that does

$10,000 worth of structural damage. How much will the insurance company pay Beth?
$10,000
$3,750
$8,000
$2,000

Answer 1

$8,000

Explanation:

The computation of the amount that paid by the insurance company to Beth is shown below:

The damage is of $10,000

So here 80: 20 represents that 80% is paid by the insurance company and 20% you would be paid

So

= Structural damage × percentage paid by the insurance company

= $10,000 × 80%

= $8,000

Hence, the correct option is third