An auto insurance policy has a deductible of 1 and a maximum claim payment of 5. Auto loss amounts follow an exponential distribution with mean 2. Calculate the expected claim payment made for an auto loss.
The distribution of the auto loss amount here is given as:
as mean is parameter reciprocal here.
Total claim payment is modelled here as:
The expected claim amount is now computed here as:
Therefore the expected claim payment made for an auto loss here is given as: 1.130976
An auto insurance policy has a deductible of 1 and a maximum claim payment of 5....
An insurance policy pays for a random loss X subject to a deductible of 550. The loss amount is modeled as a continuous random variable with density function 4500 for x > 500 f(x) = { otherwise Determine the expected payment made under this insurance policy.
1. (3 POINTS) An insurance policy pays a individual $500 per day for up to 3 days of hospitalization and $100 per day for each day of hospitalization thereafter. The number of days of hospitalization is a random variable X with P(X=x) = (6-x)/15, if x = 1,2,3,4,5. Calculate the expected payment for hospitalization under this policy. 2. (4 POINTS) An insurance policy reimburses a loss up to a benefit limit 0f $10. There is no deductible. The policyholder’s...
A probability distribution of the claim sizes for an auto insurance policy appears in the following table. Claims 3 Probability 0.15 0.15 0.05 0.05 0.3 0.3 Find the percentage of claims within one standard deviation of the mean. Preview %
An insurance policy has a deductible of 10. Losses follow a probability distribution with density fx (x) = xe* for 3 > 0 and fx (xv) = 0 otherwise. Find the expected payment Possible Answers [A]e-10 [B]2e-10 (0/106-10 (E 100e-10
In automobile collision insurance and health insurance, the policy usually has a provision calling for a deductible according to which the portion of any insured loss up to some fixed limit is payed for by the insured person; only the excess is paid by the insurance company. In addition, health insurance policies often provide for co-payments by the insured so that even after the deductible is met, the insured pays some fraction or fixed amount of the medical costs until...
1. Many insurance policies carry a deductible provision that states how much of a claim a person must pay out of pocket before the insurance company pays the remaining of the expenses. For example, if someone files a claim for $350 on a policy with a $200 deductible, he or she pays $200 and the insurance company pays $150. In the following cases, determine how much a person would pay with and without an insurance policy. Complete parts (a) and...
Sarah's comprehensive major medical health insurance plan at work has a deductible of $400. The policy pays 80 percent of any amount above the deductible. While on a hiking trip, she contracted a rare bacterial disease. Her medical costs for treatment, including medicines, tests, and a six-day hospital stay, totaled $9,440. A friend told her that she would have paid less if she had a policy with a stop-loss feature that capped her out-of-pocket expenses at $3,700. The policy with...
Jack has an automobile insurance policy with the Auto - Share Insurance Company. He has 200,000 of third party liability coverage (bodily injury/property damage) and has a 1,500 deductible on his collision coverage. Jack is at fault for an accident that injures Lucy, who is insured by Frog Insurance. Jack is successfully sued by Lucy for Lucy’s injuries. The court orders Jack to pay Lucy 170,000. Other expenses incurred are: (i) Legal fees to Auto-Share on behalf of Jack: 45,000...
An auto insurance company insures your car for one year against damage due to collision with another vehicle or object. Your policy has an annual deductible of 400. During the year there is a 90% chance that you will not have a collision and a 10% chance that you will have exactly one collision. Assume that the damage from a collision is approximated by an exponential distribution with mean 1600. (a) What is the probability that the insurer will...
Becky's comprehensive major medical health insurance plan at work has a deductible of $740. The policy pays 65 percent of any amount above the deductible. While on a hiking trip, Becky contracted a rare bacterial disease. Her medical costs for treatment, including medicines, tests, and a five-day hospital stay, totaled $9,253. A friend told her that she would have paid less if she had a policy with a stop-loss feature that capped her out-of-pocket expenses at $4,800. a. Calculate the...