An insured purchased a dwelling policy with $40,000 of coverage. The insured also purchased an automatic increase in insurance endorsement that increases the face amount of the policy by 4% each year. What will the coverage amount be when the insured pays the renewal premium for the 3rd year the policy is in effect

A. $44,995.00

B. $41,600.00

C. $43,264.00

D. $40,000.00

Question

Charity Woods

Business

22 October, 21:28

An insured purchased a dwelling policy with $40,000 of coverage. The insured also purchased an automatic increase in insurance endorsement that increases the face amount of the policy by 4% each year. What will the coverage amount be when the insured pays the renewal premium for the 3rd year the policy is in effect

A. $44,995.00

B. $41,600.00

C. $43,264.00

D. $40,000.00

+4

Answers (1)

Know the Answer?

Jimena Carson · Answer 1

C. $43,264.00

Explanation:

Lesson : Dwelling Insurance

We are given a number of $40,000

We then see that the insurance goes up 4%. We are looking for how much there will be after three years.

So we add 4% into 40,000

41,600

Add another 4% into 41,600

43,264

Now you might be wondering : Why don't I add another?

40,000 is already the first year.