1. SECTION
10-7
Homeowners Insurance
Premium pp

2. Key Words to Know premium (p. 359)
The amount paid to an insurance company for insurance.
fire protection class (p. 359)
A number assigned to property based on how safe it is from fire, used to determine the cost of insuring it.

3. Example 1
The replacement value of Yoda’s mud hut is $150,000. He has insured his home for 80 percent of its replacement value. The home is of wood-frame construction and has been rated in fire protection class 4.
What is the annual premium?

4. Example 1 Answer: Step 1 Find the amount of coverage.
Replacement × Insured Percent of
Value of Home Replacement Value
$150,000 × 80% = $120,000

5. Example 1 Answer: Step 2
Find the annual premium. (See Figure 10.5 on page 359 of your textbook.)
Find the column, Wood Frame.
Find the Fire Protection Class 1-6 column
Find the Amount of Insurance Coverage column with 120,000.

6. Example 1 Answer: Step 2 (cont.)
Follow across the column and down the row to where 120,000 and 1-6 meet.
$381

7. Practice 1 A brick home’s replacement cost is $250,000.
It is insured for 100 percent.
It is in an area rated fire protection class 3.
What is the annual premium?

8. Practice 1 Answer
$737

9. 360:1-7