A. If Arman has a $600,000 home insured for $450,000, based on the 80 percent co-insurance provision:

1. how much would the insurance company pay on a $20,000 claim?
2. If the claim was for $300,000 how much would the insurance company pay out?
3. Is the cost savings on the annual premium worth it?

B. Saif & Janail currently insure their cars with separate companies paying $1,450 and $1,275 a year. If they insured both cars with the same company, they would save 10 percent on the annual premiums.

1. What would be the future value of the annual savings over ten years based on an annual interest rate of 6 percent?

C. For each of the following situations, what amount would the insurance company pay?

1. Wind damage of $2,000; the insured has $500 deductible.
2. Theft of an entertainment system worth $2,300; the insured has a $1,000 deductible.
3. Vandalism that does $375 of damage to a home; the insured has a $500 deductible.
4. Why is it important for people who rent to have insurance?
5. What is the difference between cash value and replacement value?