Question

Zach is looking for a homeowners insurance policy for his new house. AAA Insurance company has offered him a plan that insures his home annually for $0.36 per $100 of value in the home. In order to make calculations easier, Thompson’s Insurance lists their annual homeowners insurance premium a bit differently, at $3.63 per $1,000 of value in the home. Zach’s house is worth $289,000. What should Zach be thinking as he chooses between the two insurance companies?

Answer 1

B is the correct answer. 100% on Edgen.

Step-by-step explanation:

a. $3.63 per $1,000 is approximately the same as $0.36 per $100. The premiums for the two insurance companies will be the same.

b. The annual premium for his house would be cheaper through AAA.

c. The annual premium for his house would be cheaper through Thompson’s.

d. Since the two insurance companies list their premiums differently, the two cannot be compared.

Answer 2

b. The annual premium for his house would be cheaper through AAA

Step-by-step explanation:

The first company is offering Zach $0.36 per $100 of value.

The second company is offering $3.63/$1,000= $0.363/$100

The rates rate for AAA is slightly cheaper.