Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 37

Describe three factors that determine the premium charged for fire insurance. (See Objective.) _____
Find the annual premium for fire insurance. The amount of the premium charged by the insurance company depends on several factors. Among them are the type of construction of the building, the contents and use of the building, the location of the building, and the type and location of any fire protection that is available. Wood frame buildings generally are more likely to be damaged by fire than masonry buildings and thus require a higher premium.
Building classifications are assigned to building types by insurance company employees called underwriters. These building categories are usually designated by letters such as A, B, and C. Underwriters also assign ratings called territorial ratings to each area that describe the quality of fire protection in the area. Although fire insurance rates vary from state to state, the rates in the following table are typical.