Question

Zach is looking for a homeowners insurance policy for his new house. AAA Insurance company has offered him a plan that insures his home annually for $0. 36 per $100 of value in the home. In order to make calculations easier, Thompson’s Insurance lists their annual homeowners insurance premium a bit differently, at $3. 63 per $1,000 of value in the home. Zach’s house is worth $289,000. What should Zach be thinking as he chooses between the two insurance companies? a. $3. 63 per $1,000 is approximately the same as $0. 36 per $100. The premiums for the two insurance companies will be the same. B. The annual premium for his house would be cheaper through AAA. C. The annual premium for his house would be cheaper through Thompson’s. D. Since the two insurance companies list their premiums differently, the two cannot be compared.

Answer 1

The annual premium for Zack's house would be cheaper through AAA than Thompson’s Insurance.

How to calculate the annual premium of two companies?

AAA company is offering $0.36 per $100 of value.

Thompson company is offering $3.63 per $1,000 of value;

$\frac{3. 63 }{1000} \\=\frac{0.363}{100}$

Hence, 0.363 is higher than 0.36, which makes AAA company more beneficial for insurance.

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