Yolanda wishes to obtain fire insurance for a rental property she owns. The building is valued at $480,000 and the contents are worth $635,800. Based on Table 19-4 from your text, what would be her total premium if the building has a structural classification of C and area rating of 1? (Round your answer to the nearest cent)

Question

Quizplus · Accepted Answer

The total premium is calculated by adding the premiums for the building and the contents. For a structural classification of C and area rating of 1, the rates per $100 of coverage for the building and contents can be applied as follows: if the building rate is $0.74 per $100 of coverage, the premium for the building would be $480,000 / 100 * $0.74 = $3,552. For the contents, if the rate is $0.148 per $100 of coverage, the premium for the contents would be $635,800 / 100 * $0.148 = $941.36. Adding these together gives a total premium of $3,552 + $941.36 = $4,493.36, which, when rounded to the nearest cent, is $4,494.36.

Yolanda Wishes to Obtain Fire Insurance for a Rental Property