Question

a homeowner wants to purchase a home insurance policy for their $250,000 house. the insurance company offers a policy with an annual premium rate of 0.5% of the homes value. what is the annual premium for this home insurance policy? $1,500 $2,500 $1,250 $12,500

Explanation:

Step1: Convert percentage to decimal

The premium rate is 0.5%, which as a decimal is \( 0.5\% = \frac{0.5}{100}=0.005 \)

Step2: Calculate the annual premium

The home's value is \$250,000. To find the premium, multiply the home's value by the premium rate: \( 250000\times0.005 = 1250 \)

Answer:

\$1,250