Real-Life Math
Insurance adjusters use math regularly to calculate property damages and policy payouts. They calculate replacement values, business interruption losses, depreciation values, labor costs, parts costs and so on. Mathematics is a very important part of their job.
Mrs. Matthews is a local senior citizen who is famous around town for her eccentricities and her car. She drives a 1967 baby blue Mustang. Everyone in town, including you, the insurance adjuster, knows Mrs. Matthews has named her car Clive.
Today, Mrs. Matthews and Clive have been involved in a fender bender. She has brought Clive into the insurance company claim center for an appraisal of the damage.
The car is still driveable, but Mrs. Matthews is on the verge of a breakdown. Clive is her dearest possession.
Mrs. Matthews explains what happened. "I was driving down Second Avenue and going the speed limit. I never speed," she says.
"And I thought I saw old Mr. Jefferson's cat dart up a tree. The cat's been missing for a week now, and I know how he misses it, so I turned my head to make sure it was his cat.
"Then suddenly, I felt a great crash and realized I'd hit that little red car in front of me. It had stopped at a red light. Honestly, I only looked away for a moment."
You reassure Mrs. Matthews that the damage will be covered by her insurance -- except for her $250 deductible. It will also cover the damage to the other car. But Mrs. Matthews is only concerned about Clive right now.
Poor Clive has seen better days. He definitely needs a front bumper and a grill. There's also some damage to the hood.
You flip through your pricing catalog and sees that the new bumper will cost $420. It will take 2 hours of labor to replace it. The price of a new grill is $350 and it will take another hour to replace.
You estimate it will take 2 hours to pound the hood back out to its original condition, and 3 hours to paint.
The paint will cost $315 and there are some other materials required for repairing the panel and the paint. You estimate those materials to be about $195.
Tax of 6 percent needs to be added to the parts and materials. Labor costs are $42 per hour.
How much will it cost the insurance company to put Clive back together again?