The new owner of a house needs hazard coverage for $98,000. The annual premium is $0.44 per $100.00 of the amount insured. The insurance company agreed to make the cost of the policy 2 ½ times the annual rate for a 3 year policy. How much would the monthly insurance payments be to pay for this policy?

Question

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DeniceSandidge DeniceSandidge · Answer 1 · 2020-03-15T11:13:26+01:00

Answer:

monthly insurance payments = $29.94

Explanation:

given data

hazard coverage = $98,000

annual premium = $0.44 per $100.00

cost of the policy = 2 ½ times annual rate for 3 year policy

solution

we get here first normal premium cost per year that is

normal premium cost per year = $98000 × 0.44 × [tex]\frac{1}{100}[/tex]

normal premium cost per year = $431.2

and

insurance company is offering for new owner discount for purchasing a three year policy

so here the total cost for the three year is

total cost for the three = $431.2 × 2.5 = $1078

and now we get monthly insurance payments for 3 year is

monthly insurance payments = [tex]\frac{1078}{36}[/tex]

monthly insurance payments = $29.94