Liability Exposures		Property Exposures
Amount of Loss	Probability of Loss	Amount of Loss	Probability of Loss
$8,000,000	.015	$4,000,000	.035
$0	.985	$0	.965

1If both the property & liability exposures are bundled together and covered under a single contract that has a premium loading equal to 28% of the bundled expected losses, how much savings in premium will be achieved? (Assume these exposures are independent and as before, dont be concerned with the time value of money.)

2 A firm has historically purchased separate policies for this property insurance and liability insurance. Each of the policies had $4 million retention. The company is now considering the purchase of a bundled policy which covers both property and liability exposures. The retention of the bundled policy is to be $8 million. Draw a graph illustrating the areas of unnecessary coverage that will exist if the firm continues with separate policies.