Answer :
To find the amount of coverage and the annual insurance premium, we can follow these steps:
a) **Amount of Coverage**:
- The home is insured for 75% of its replacement value.
- Let's calculate 75% of the replacement value.
- 75% of $400,000 = 0.75 * $400,000 = $300,000
- Therefore, the amount of coverage is $300,000.
b) **Annual Insurance Premium**:
- The premium is usually calculated as a percentage of the insured amount.
- Let's assume the premium rate is 0.5% of the insured amount.
- Annual premium = Premium rate * Insured amount
- Annual premium = 0.005 * $300,000
- Annual premium = $1,500
So,
a) The amount of coverage is $300,000.
b) The annual insurance premium is $1,500.
