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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

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Answers (1)
  1. 22 October, 21:54
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    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.
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