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A renter s insurance policy is written to cover a loss, X, where X has a Uniform distribution with boundaries ranging from no loss up to a maximum of $2000.
a. What is the expected loss?
b. What is the variance in the loss?
c. If a deductible is set at $500, what is the probability that the loss would be above the deductible?
d. How much money will the insurance company expect to pay on a claim if the deductible is set at $500?
e. How much money will the renter expect to pay on a claim if the deductible is set at $500?
f. At what level must the deductible be set in order for the expected amount of money the insurance company pays on a claim to be only 10% of what it would be if there were no deductible? |
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