Question

Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner’s insurance policy is $700 for the coverage they need. Their insurance company offers a discount of 6 percent if they install dead-bolt locks on all exterior doors. The couple can also receive a discount of 3 percent if they install smoke detectors on each floor. They have contacted a locksmith, who will provide and install dead-bolt locks on the two exterior doors for $84 each. At the local hardware store, smoke detectors cost $19 each, and the new house has two floors. Dave and Ellen can install them themselves.

a. What discount will Dave and Ellen receive if they install the dead-bolt locks?

b. What discount will Dave and Ellen receive if they install smoke detectors?

Answer 1

a: Discount if they install the dead bol locks = % Discount* Annual premium

= 6%*700= $42

b: Discount if they install the smoke detectors = % Discount* Annual premium

= 3%*700 = $21