Question

A house is valued at $198,000. It is to be insured for 80% of its cost. Insurance will cost $6 per $1,000. What is the annual insurance premium?

Answer 1

Answer: Annual insurance premium would be $950.40.

Explanation:

Since we have given that

Value of house = $198,000

Percentage of its cost is insured = 80%

Value of house is insured is given by

`(80)/(100)* 198,000\\\\=0.8* 198,000\\\\=\$158,400`

Cost of insurance = $6 per $1000.

So, Annual insurance premium would be

`(6)/(1000)* 158,400\\\\=0.006* 158,400\\\\=\$950.40`

Hence, Annual insurance premium would be $950.40.