Question

Sylvia Baxter's Cape Cod beach home has a replacement value

of $500,000. She insures it for 80 percent of its replacement value. Her home is brick and her
area is rated fire protection class 11. How much more would her annual premium be if she
lived in a wood-frame home?
A. $106 B. $135 C. $1,617 D. $1,723

Answer 1

Explanation:

To calculate the difference in annual premium, we need to determine the premium for a wood-frame home and compare it to the premium for a brick home.

The premium for a brick home is calculated as follows:

Premium = Replacement Value x Rate x (Fire Protection Class Factor)

= $500,000 x 0.80 x (Fire Protection Class 11 Factor)

Since the question does not provide the specific rate or the Fire Protection Class Factor, we cannot calculate the exact difference in premium. Therefore, we cannot determine which answer choice is correct (A, B, C, or D).

To obtain the accurate difference in premium, we would need additional information such as the specific rate for a wood-frame home and the corresponding Fire Protection Class Factor.