Question

Sherman’s deductible for his home insurance plan is $1,800. A tree falls on his house during a storm and damages the roof on his house. and the insurance adjuster approves any repairs plus an 8% tax. The roofer estimates that it will cost $6,400 before tax.

A) What is the total amount of the repair that is covered?

B) How much will Sherman have to pay if he has had no previous claims in the past year?

C) How much will the insurance company have to pay?

Answer 1

A) The total amount of the repair that is covered is the cost of the repair plus tax, minus the deductible. The cost of the repair plus tax is:

$6,400 x 1.08 = $6,912

So the total amount covered is:

$6,912 - $1,800 = $5,112

Therefore, the total amount of the repair that is covered is $5,112.

B) If Sherman has had no previous claims in the past year, he will have to pay the amount of the deductible, which is $1,800.

C) The insurance company will have to pay the cost of the repair plus tax, minus the deductible. We already calculated the cost of the repair plus tax to be $6,912, and the deductible is $1,800. Therefore, the insurance company will have to pay:

$6,912 - $1,800 = $5,112

So the insurance company will have to pay $5,112.

I hope this seems right to you!