Leroy bought a homeowner's insurance policy when he purchased his new home. He pays an annual premium of $825 for property coverage of $300,000 and liability coverage of $400,000. His deductible is $1,400. Leroy pays this premium for 14 years, at which point Leroy’s dog bites a neighbor walking down his sidewalk. The neighbor sues Leroy for $22,000 in medical bills and pain and suffering. Leroy submits this as a claim to his homeowner’s insurance company. If the claim is approved, how much will Leroy’s insurance company pay the neighbor?

$10,450

$22,000

$21,175

$20,600

Question

Leroy bought a homeowner's insurance policy when he purchased his new home. He pays an annual premium of $825 for property coverage of $300,000 and liability coverage of $400,000. His deductible is $1,400. Leroy pays this premium for 14 years, at which point Leroy’s dog bites a neighbor walking down his sidewalk. The neighbor sues Leroy for $22,000 in medical bills and pain and suffering. Leroy submits this as a claim to his homeowner’s insurance company. If the claim is approved, how much will Leroy’s insurance company pay the neighbor?

 $10,450

 $22,000

 $21,175

 $20,600