# House Hunting Finding your own place is exciting, but it is also a big responsibility. What are some costs associated with renting or buying a home?

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House Hunting Finding your own place is exciting, but it is also a big responsibility. What are some costs associated with renting or buying a home?

Lesson Objective Calculate the annual homeowners insurance premium Content Vocabulary premium The amount paid to an insurance company for insurance coverage. fire protection class A number assigned by an insurance company to a building that reflects how fire resistant it is and how close it is to a water source.

Figure 10.6

The replacement value of Marcia Sykes home is \$150,000. She has insured her 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? Example 1

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

Find the annual premium. (See Figure 10.6 on page 393 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. Example 1 Answer: Step 2

Follow across the column and down the row to where 120,000 and 1-6 meet. \$476 Example 1 Answer: Step 2 (cont.)

A brick homes 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? Practice 1