3. A homeowner’s house is insured at $950,000. The insurer requires 75% coverage for full insurance. The home sustains $25,300 damage from fire. The policy has a deductible of $10,000, which decreases linearly to zero when the total cost of the loss is $20,000. The house is valued at $1,360,000. How much does the insurer reimburse?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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3. A homeowner’s house is insured at $950,000. The insurer requires 75% coverage for full insurance. The home sustains $25,300 damage from fire. The
policy has a deductible of $10,000, which decreases linearly to zero when
the total cost of the loss is $20,000. The house is valued at $1,360,000.
How much does the insurer reimburse?

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