Question

Your homeowner’s policy has a premium of $150, a deductible of $5000, and a limit of $300,000. Your home suffers $500,000 in damages. How much will you pay?

Answer 1

The amount that the person get after he home suffers $500,000 in damages is $20000.

What is deductible amount?

Deductible amount is the amount which is paid by one in the starting of any policy.

The homeowner’s policy has a premium of $150. Thus, the amount paid in a year is,

$150\times12=1800$

The home suffers $500,000 in damages and the deductible is of $5000. Thus, the amount remain is,

$A=500000-5000\\A=495000$

The limit of the policy is $300000. Thus, the amount will be remained as,

$A=495000-300000\\A=195000$

If we include the deductible amount, then,

$A=195000+5000\\A=200000$

This amount does not include the premium paid by the homeowner. Hence the amount that the person get after he home suffers $500,000 in damages is $20000.

Learn more about the deductible amount here;

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