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The probability distribution for damage claims paid by the Newton Automobile Insurance Company on collision insurance follows. Payment ( Probability .85 0 .04 500 .04 1000 .03 3000 .02 5000 .01 8000 .01 a. Use the expected collision payment to determine the collision insurance premium that would enable the company to break even b. The insurance company charges an annual rate of 520 for the collision coverage. What is the expec
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1) An insurance company sells a one-year automobile policy with a deductible of 2. The probability that the insured will incur a loss is 0.05. If there is a loss, the probability of a loss of amount N is (K)/(N) for N = 1, ..., 8 and K a constant. These are the only possible loss amounts and no more than one loss can occur. Determine the net premium for this policy.
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