QUESTION FOUR (Applied Cases) (points 6) Answer the following cases First Applied Case Osman purchased a dining room set for $5000 and insured the furniture on actual cash value basis. Three years later, the set was destroyed in a fire, the property had depreciated in value by 50%. The replacement cost of a new dining room set at the time of loss was $6000. Given that the deductible is $1000, how much will Osman collect from his insurer? Explain your answer. Solution Second Applied Case Fred has a PAP with the following coverages Liability coverages: $ 100,000/$300,000/$50,000 Medical payments coverage: $5000 each person Uninsured motorists coverage: $25,000 each person Collision loss: $250 deductible Other-than-collision loss: $100 deductible With respect to each of the following situations, indicate whether the loss is covered and the amount payable, if any, under the policy. Assume that each situation is a separate event 11- a- Fred's son age 16 is driving a family car, runs a red light, and kills a pedestrian. The family of the deceased pedestrian sues and damages are awarded in the amount of $ 500,000 b- Fred borrows a friend's car to go to the supermarket. He fails to stop at a red light and negligently smashes into another motorist. The other driver's car, valued at $15,000, is totally destroyed. In addition, repairs to the friend's car $5000 c- Fred's wife is driving a family car in a snowstorm. She loses control of the car on an icy street and smashes into a foundation of a house. The property damage to the house is $30,000. The damage to the family car is $8000. Fred's wife has medical expenses of $5000 Solution (a)- (b) (b) (c) Third Applied Case Delta insurance is a property insurer that entered into a surplus-share reinsurance treaty with Eversafe Re. Delta has a retention limit of $200,000 on any single building, and up to nine lines of insurance may be ceded to Eversafe Re. A building valued at $1,600,000 is insured with Delta. Shortly, after the policy was issued, a severe windstorm caused a $800,000 loss to the building a- How much of the loss will Delta pay? b- How much of the loss will Eversafe Re pay? Solution