Lesson 2 feb 17
- 3. Five main factors that determine the cost of homeowners insurance 1) Replacement Cost building (house) contents (usually up to 70% of the replacement value) outbuildings (shed, garage, up to 10% of replacement cost) additional living expense third party liability (protection against someone being injured on your property) 2) Location 4 main areas in Manitoba Area 1 Metro Winnipeg, inside the city limits Area 2 Protected, outside city limits but within 1000 ft of fire hall Area 3 Semiprotected, outside area 1 and area 2, but within 8 miles of a fire hall Area 4 Unprotected, located more than 8 miles from fire hall 3
- 4. 3) Types of Coverage Comprehensive, covers most things, some specific items must be indicated Broad/Standard, covers only specific perils 4) Amount of deductible the lower your deductible the less you pay if you need to make a claim the lower your deductible the higher your premium 5) Available Discounts claim free new home burglar alarm purchaser is over 50 or 60 years old 4
- 5. Jeric and Allison wish to insure their house in Metro Winnipeg. The replacement cost is $195 000. What will their premium be if they decide they want comprehensive insurance with a $200 deductible? http://www.edu.gov.mb.ca/k12/assess/archives/cm_wt_rp_08.pdf For a $500.00 deductible premium = $742.00 For a reduced deductible of $200.00 premium increase by 10% (What is 10% of $742.00) Reduced deductible charge = (10 ) x $742.00 = $74.20 100 Total premium = basic premium + reduced deductible charge = $742.00 + $74.20 = $816.20 5
- 6. PJ and Dearly have purchased a home with a replacement value of $250 000 just outside of Winnipeg. The house is within 800 feet of a fire hydrant. They want to purchase standard insurance with a $500 deductible. Calculate their annual premium. http://www.edu.gov.mb.ca/k12/assess/archives/cm_wt_rp_08.pdf Within 800 ft means they live in Area 2 For a $500.00 deductible premium = $519.00 on first $200 000 + $ 147.00 on next $50 000 $666.00 Total Premium For a reduced deductible of $200.00 premium increase by 10% (What is 10% of $666.00) Reduced deductible charge = (10 ) x $666.00 = $66.60 100 Total premium = basic premium + reduced deductible charge = $666.00 + $66.60 = $732.60 6
- 7. Tenant Insurance Ally has rented an apartment and wants to insure her belongings for $35 000. She wants a standard policy with a $200 deductible. Calculate Ally's annual premium. For a $500.00 deductible premium = $199.00 For a reduced deductible of $200.00 premium increase by 10% (What is 10% of $199.00) Reduced deductible charge = (10 ) x $199.00 = $19.90 100 Total premium = basic premium + reduced deductible charge = $199.00 + $19.90 = $218.90 7
- 8. Assignment #2, Page 21 Questions 1 7 Hard working Students 8