Application Time! Sam (Jessica's husband) home has a replacement value with a deductible. A couple of years ago he insured his home and the coverage never increased, even though the policy required coverage of 80% of the replacement cost. Last month, he had a kitchen fire, which caused damages. How much will he have to pay out of pocket? Step 1: Calculate the Amount Loss minus the Deductible $74,500.00 Step 2: Calculate the Replacement Cost $200,000.00 Step 3: Calculate the % Amount Covered 75% Step 4: Calculate the Total Amount Reimbursed $69,843.75 Step 5: What is the % she will pay? (1 minus the % amount covered) 25% Step 6: What is the Total Amount she will pay? $5, 156.25 What observation do you see with this current coverage situation? What could be different