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A contractor's license bond costs $450 annually for $15,000 coverage. If the contractor needs to increase coverage to $25,000 due to a claim, and the rate increases proportionally, what is the new annual cost?

Correct Answer

C) $750

Rate per $1,000 = $450 ÷ 15 = $30. New cost = $30 × 25 = $750 annually for $25,000 coverage.

Answer Options
A
$850
B
$650
C
$750
D
$950

Why This Is the Correct Answer

Rate per $1,000 = $450 ÷ 15 = $30. New cost = $30 × 25 = $750 annually for $25,000 coverage.

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