Insurance & Other Housing Costs Lesson 6.6

Homeowners Insurance 6.6a

Homeowners insurance is designed to protect the owner from fire, theft, and personal liability. Amt. of coverage on home Amount Of = Coverage * Percent

Total Coverage = 95,000(.80) = $76,000 Personal Prop. = 76,000(.50) = The replacement value of a house is estimated at $95,000 it is insured for 80% of its replacement value. Use table in your notes, to find the total amount of coverage and amount of coverage on personal property, loss of use, and garage and other structures. Total Coverage = 95,000(.80) = $76,000 Personal Prop. = 76,000(.50) = $38,000 Loss of Use = 76,000(.20) = $15,200 Garage/Structures = 76,000(.10) = $7,600

Total Coverage = 105,000(.80) = $84,000 Personal Prop. = 84,000(.50) = The replacement value of a house is estimated at $105,000 it is insured for 80% of its replacement value. Use pg. 357 to find the total amount of coverage and amount of coverage on personal property, loss of use, and garage and other structures. Total Coverage = 105,000(.80) = $84,000 Personal Prop. = 84,000(.50) = $42,000 Loss of Use = 84,000(.20) = $15,800 Garage/Structures = 84,000(.10) = $8,400

Premiums differ for insurance coverage vary depending on location Premiums differ for insurance coverage vary depending on location. Your homeowners policy premium is the amount you have to pay for insurance coverage. The home will be given a number that indicates how fire resistant the house is and how close it is to a water source. This is the fire protection class.

Step 1: Amount of Coverage 150,000(.80) = $120,000 The replacement value of Marcia Syke’s home is $150,000. She has insured her home for 80 percent of its replacement value. The home is of word-frame construction and has been rated in fire protection class 4. What is the annual premium? Step 1: Amount of Coverage 150,000(.80) = $120,000 Step 2: Annual Premium (Table Value) $38100

Other Housing Costs 6.6b

There are a lot of other costs associated with houses There are a lot of other costs associated with houses. Utilities are the main thing. Housing costs should be no more than 35% of the owners take-home pay for the month.

+ 918.66 Total Expenses = $918.66 Recommended Housing = 2,545(.35) If your monthly take home is $2,545. Find if the housing costs are 35% or less for the month. Housing costs for Oct. Mortgage Payment $523.90 Insurance $20.00 Real Estate Taxes $115.87 Electricity $42.59 Gas Heat $50.36 Water $30.45 Cell Phone $75.50 Dish TV $59.99 Total Expenses = $918.66 Recommended Housing = 2,545(.35) = $890.75 Expenses are more or less than recommended? + = 918.66 – 890.75 918.66 $27.91 more than recommended

+ 999.41 Total Expenses = $999.41 Recommended Housing = 2,177(.35) If your monthly take home is $2,177. Find if the housing costs are 35% or less for the month. Housing costs for Nov. Mortgage Payment $645.75 Insurance $25.00 Real Estate Taxes $108.57 Electricity $36.52 Gas Heat $55.61 Water $28.47 Cell Phone $50.00 Dish TV $49.49 Total Expenses = $999.41 Recommended Housing = 2,177(.35) = $761.95 Expenses are more or less than recommended? = 999.41 – 761.95 + $237.46 more than recommended 999.41

6.6: Insurance & Other Housing Costs Questions? Summarize your notes Homework Worksheet