The owners of Newman Grocery Supply want to insure a building for $220,000 and t

Question

The owners of Newman Grocery Supply want to insure a building for $220,000 and the building's contents for $190,000. According to their insurance agent, the building's area rating is 3, and the building's classification is B. Using the calculate the following. 1. Premium for insuring the building: 2. Premium for insuring the contents: 3. Total insurance peemium: s D SD s ClearUndo Fire insurance rate table about:blank Fire insurance rates per $100 of coverage for buildings and contents Classification of building Class A Class B Rating of area Bulding Contents 35 47 .50 Building 41 50 61 54 60 65 28 41

Explanation / Answer

Newman Grocery Supply

Determination of total insurance premium:

The building belongs to the category of Class B, with rating 3

The corresponding insurance rates per $100 as given in the fire insurance rate table,

Building          0.61, Contents             0.65

Expected insurance value for Building          $220,000

Expected insurance value for Contents         $190,000

Hence, Premium for insuring the Building    $220,000 x 0.61 =$134,200

Premium for insuring the Contents                $190,000 x 0.65 = $123,500

Total insurance premium                               $134,200 + $123,500 = $257,700

Total insurance premium = $257,700

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