Limit of Liability (LOL) method- the amount that an insurer would pay for a particular loss...

Limit of Liability (LOL) method- the amount that an insurer would pay for a particular loss if they were the ONLY insurer covering it.

Example:

You buy two policies from Insurers A and B, respectively: FA_A = $20,000 and FA_B = $80,000. If a loss = $50,000 occurs and it is covered by both contracts, how do insurers pay for this loss?

Determine a percentage to split the loss:

The percentage of the loss should Insurer A pay for =
The percentage of the loss should Insurer B pay for =

Determine the amount payable by each insurer:

How much should Insurer A pay for the claim?
How much should Insurer B pay for the claim?

Solutions

Expert Solution

The answer is attached in below picture,

If you have any doubts or answer is not in the format as you expected, please send me a comment before rating my answer and i will clarify the doubt

Thanks

ekkarill92 answered 11 months ago

Next > < Previous

Related Solutions

Losses are uniformly distributed on [0, m]. The insurer pays the amount of loss after a...

Losses are uniformly distributed on [0, m]. The insurer pays the amount of loss after a deductible of m/5.There is a 60% chance that the insurer pays at least 200. Find the probability that the insurer pays at least 500.

1-3 What procedure is followed when the insured and the insurer disagree on the loss amount...

1-3 What procedure is followed when the insured and the insurer disagree on the loss amount under the homeowners policy? What if they disagree as to whether the loss is covered?

An insurance contract which specifies that the insurer pay apreset amount upon the happening of...

An insurance contract which specifies that the insurer pay a preset amount upon the happening of some contingency is called:A. a valued contract.B. an indemnity contract.C. a coinsurance contract.D. an insurance-to-value contract.

a)What is the maximum amount he would be willing to pay for an insurance above the expected loss?

If Lesley has $100 and 10% probability of losing $30.His utility of having $100 is 10,his utility of having $70 is 8,and his utility of having $97 is 9.8. Please, answer and graph:a)What is the maximum amount he would be willing to pay for an insurance above the expected loss?

Indicate the amount Erismus would record as an asset, liability, or not accrued in the following...

Indicate the amount Erismus would record as an asset, liability, or not accrued in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,860,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall...

what is a contingent liability and how would you determine the amount to record for a...

what is a contingent liability and how would you determine the amount to record for a contingent liability?

Jane has a Dwelling limit of $500,000 with a deductible of $2000 and a $1million Liability limit.

Jane & Sue both have HO insurance.Jane has a Dwelling limit of $500,000 with a deductible of $2000 and a $1million Liability limit.Sue has a Dwelling limit of $750,000 with a deductible of $5000 and a $2million Liability limit.Sue is visiting Jane and a heavy light fixture falls on her head. Sue’s medical expenses are $10,000 (ambulance, emergency room services, stitches, overnight stay for concussion).Whose policy is ultimately responsible for Sue’s losses?What coverage part of the HO insurance policy is...

What is the difference between a single limit and a split limit in expressing liability limits...

What is the difference between a single limit and a split limit in expressing liability limits in the PAP? Explain how the Securities and Exchange Commission attempts to prevent violations of SEC regulations.

Aon, a brokerage firm, negotiated with AIG (an insurer) to write a commercial property and liability...

Aon, a brokerage firm, negotiated with AIG (an insurer) to write a commercial property and liability insurance policy for the Metropolitan Transportation Authority (MTA) that is specifically tailored to the MTA's risk profile. This policy, DIFFERENT from most other insurance contracts, is a ____ Personal contract Contract of adhesion Valued contract Manuscript contract

A property insurer provided the following information: Determine the loss, expense and combined ratios.

A property insurer provided the following information: Determine the loss, expense and combined ratios.Premiums written $55,000,000Expenses incurred 9,000,000Incurred losses & loss adjustment expenses 38,000,000Earned Premiums 42,000,000

Subjects