CASE APPLICATION a. Assume you are a risk management consultant. Identify the major loss exposures that Fred faces. Fred purchased an old house near a river. Although the house needs major repairs, it will be his main residence. The river overflows periodically, which has caused b. Explain the major differences among the HO-3, DP-3, and DP-1 policies discussed by the agent. c. To what extent will each of the coverage alterna tives discussed by the agent cover the loss expo- sures identified in (a)? d. Assume that Fred buys a DP-3 policy. Do you recommend that he also purchase the personal liability supplement? Explain. e. Assume that Fred obtains a DP-1 policy. Do you recommend that he also purchase flood insurance through the National Flood Insurance Program? Explain. substantial damage to several homes in the area. Fred lives alone, but he keeps two German shepherd dogs on the premises as watchdogs. He also has a small 15-horsepower boat, which is used for fishing. An insurance agent has informed Fred that the house cannot be insured under a Homeowners 3 (HO-3) policy because the house did not meet the underwriting require- ments. The agent stated he would try to get the under- writer to approve a Dwelling Property 3 policy (DP-3) or a Dwelling Property 1 policy (DP-1). As a last resort, the agent stated that coverage might be available through the state's FAIR plan