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
Accepted Solution
A:
Step 1: We need to find how many $100s are in $355,000 because that is the portion she is responsible to pay.
355,000 ÷ 100= 3,550
Step 2: Multiply $0.42 by 3,550
0.42 * 3,550= $1,491 out of pocket total to pay for every $100 (before deductible)
Step 3: Total payment = deductible plus portion to pay for every $100
Total= $1,491 + $500= $1,991 total annual out of pocket expenses
$1,991 would be the total annual out of pockets expenses in the event of a major mishap.