Howie Homeowner has owned his home for 8 years. He purchased it for $250,000 and the insurance company required a policy with 80% minimum coverage so Howie bought a $200,000 HO-3 homeowner's insurance policy. He has a $2,500 deductible on his policy. He still owns that policy, even though the replacement cost of the home is now $320,000. If Howie suffer a $40,000 fire loss to the home, what is the dollar amount: 1. The loss that would be covered by his policy (paid by the insurance company) 2. The amount Howie must pay out of pocket