The Miller family owns a house and car with no loans so that all the assets total $300,000. They are a young family with a combined household income of $55,000. There is a 5% chance of losing the car which is currently valued at $20,000 and a 7% chance of losing the home as they live in a fire prone area. The house and contents was recently valued at $445,000. The couple is looking at insurance and wants to understand if the current Insurance premium costs are too high for them. After settling on the fully covered insurance, the family thought about upgrading the current car. Their nephew Jonas borrowed the Miller's family car without telling anyone as he wanted to impress his friends. After driving for 30 minutes, Jonas lost control of the vehicle and crashed into a parked police car which resulted in substantive damage to both cars. Terrified of being caught, Jonas fled the scene.

Calculate the fair premium for each Asset prior to Jonas taking the car. In addition, compare the wealth without the risk and the wealth with insurance. 4 marks In your own words explain whether the Miller family are able to claim any insurance?

Explain each stage of the 'subrogation' process and the impact this process has toward premiums. 4 marks

Do you think Jonas should pay any money direct to the family? Why or why not? 2 marks