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

Answer 1

$1,991 will be the total annual out of pocket expenses in the event of a major mishap.

Explanation:

The given information is :

Amount of insurance policy = $ 355,000

Annual premium = $ 0.42 per $100

Deductible amount = $ 500

Then the total annual out of pocket expense will be =

`((355000)/(100)*0.42 )+500`

=>
`1491+500` =$1991

Therefore, $1,991 will be the total annual out of pocket expenses in the event of a major mishap.

Answer 2

Under this policy, in the event of a major mishap, Stephanie would have a total annual out-of-pocket expense of $500 which is the deductible of the insurance policy. The out of pocket expense is a cost that a person must pay in order to activate his or her insurance. Based on this policy, there is no copay or coinsurance cost, thus, Stephanie only responsible for paying the deductible.