Question

Stephanie has a homeowners insurance policy for her $355,000 home with an annual premium of $0.42 per $100 of value and a deductible of $500. Under this policy, in the event of a major mishap, Stephanie would have a total annual out-of-pocket expense of (($355,000/100) x $0.42) + $500= $1,991. Stephanie would like to lower her premium by increasing her deductible. If Stephanie wants to increase her deductible to $1000, what annual premium would result in an annual out-of-pocket expense that is about the same as her current plan? a. $0.16 per $100 of value b. $0.28 per $100 of value c. $0.35 per $100 of value d. $0.46 per $100 of value

Answer 1

b. 0.28 per $100 of value if u need any further help let me know

Answer 2

$0.28 per $100 of value

Explanation:

We are given Amount of insurance policy for Stephanie = $ 355,000

Annual premium = $ 0.42 per $100

Deductible amount = $ 500

Total Annual out of pocket expense = [($355,000/100) x $0.42] + $500

= $1,991

Now, New Deductible amount that Stephanie wants = $ 1000

So,Let annual premium be x .

So, now to find the annual premium in an annual out-of-pocket expense that is about the same as her current plan when deductible amount increases to $1000

⇒
`((355000)/(100) x)+1000=1991`

⇒
`3550x=1991 -1000`

⇒
`3550x=991`

⇒
`x=(991)/(3550)`

⇒
`x=0.279`

Thus x = 0.279≈0.28

Hence the annual premium would result in an annual out-of-pocket expense that is about the same as her current plan is $0.28 per $100 of value