To determine the out-of-pocket cost for the repair associated with Event 2, we need to consider the deductible for the insurance policy and the cost of the repair itself. Here is the detailed step-by-step solution:
1. Identify the deductible amount: In this case, the deductible is \[tex]$1000. This means that the owner is responsible for covering up to \$[/tex]1000 of any repair cost before the insurance coverage kicks in.
2. Identify the repair cost for Event 2: The repair cost for Event 2, which involves property damage, is \[tex]$1800.
3. Compare the repair cost with the deductible:
- If the repair cost is less than or equal to the deductible, the owner pays the full repair cost out of pocket.
- If the repair cost is greater than the deductible, the owner pays only the deductible amount out of pocket.
4. Calculate the owner’s out-of-pocket cost for the Event 2 repair:
- Since the repair cost (\$[/tex]1800) is greater than the deductible (\[tex]$1000), the owner’s out-of-pocket cost will be exactly the deductible amount which is \$[/tex]1000.
Therefore, the owner's out-of-pocket cost for the repair associated with Event 2 is \$1000.
