80.2K

Verified Solution

Link Copied!

4. Calculations. Points as indicated. You must show your work to receive credit for your answer. It is in your best interest to show your work as partial credit may be awarded. a. Audra purchased a living room set for $4,000. Her home and the contents were destroyed by a tornado (a covered peril). At the time of the loss, the living room set was worth $3,500 due to depreciation. Replacement furniture will cost $4,200. If the living room set was insured on an actual cash value basis, how much will Audra collect for this loss? Assume a $250 deductible applies to the loss. (2 points) b. Eric would like to calculate his human life value. He believes his average annual earnings for the next 12 years will be $80,000. Of this amount, 45 percent will be used to support his family and 55 percent will be used to pay taxes and for his own personal maintenance expenses. Assuming an interest rate of 5 percent, what is Eric's human life value? (2 points) c. Culbreath Company purchased a building to store finished goods. They insured the building for $150,000 under a property insurance policy that included an 80 percent coinsurance clause and a $500 deductible. When the building was valued at $200,000 it was damaged by a fire. The damage was $50,000. Assuming "fire" is a covered peril, how much will Culbreath Company receive from their insurer to settle this claim? (2 points) d. Jennings Company has a general liability insurance policy with Insurer #1 with a $50,000 per- occurrence limit. Jennings has a second general liability insurance policy with another insurer (Insurer #2) with a $250,000 per-occurrence limit. A customer was injured at a Jennings store, and Jennings was ordered pay $90,000 in damages to the injured customer. Assuming both policies would cover the claim, how would the claim be settled on a pro-rata liability basis? Clearly indicate how much would be paid under Policy #1 and under Policy #2. (2 points) 4. Calculations. Points as indicated. You must show your work to receive credit for your answer. It is in your best interest to show your work as partial credit may be awarded. a. Audra purchased a living room set for $4,000. Her home and the contents were destroyed by a tornado (a covered peril). At the time of the loss, the living room set was worth $3,500 due to depreciation. Replacement furniture will cost $4,200. If the living room set was insured on an actual cash value basis, how much will Audra collect for this loss? Assume a $250 deductible applies to the loss. (2 points) b. Eric would like to calculate his human life value. He believes his average annual earnings for the next 12 years will be $80,000. Of this amount, 45 percent will be used to support his family and 55 percent will be used to pay taxes and for his own personal maintenance expenses. Assuming an interest rate of 5 percent, what is Eric's human life value? (2 points) c. Culbreath Company purchased a building to store finished goods. They insured the building for $150,000 under a property insurance policy that included an 80 percent coinsurance clause and a $500 deductible. When the building was valued at $200,000 it was damaged by a fire. The damage was $50,000. Assuming "fire" is a covered peril, how much will Culbreath Company receive from their insurer to settle this claim? (2 points) d. Jennings Company has a general liability insurance policy with Insurer #1 with a $50,000 per- occurrence limit. Jennings has a second general liability insurance policy with another insurer (Insurer #2) with a $250,000 per-occurrence limit. A customer was injured at a Jennings store, and Jennings was ordered pay $90,000 in damages to the injured customer. Assuming both policies would cover the claim, how would the claim be settled on a pro-rata liability basis? Clearly indicate how much would be paid under Policy #1 and under Policy #2. (2 points)

Answer & Explanation Solved by verified expert

See Answer