RMI 2901 HW 8 S 11

RMI 2901 HW 8 S 11 - Tracey How much of the $200,000 does...

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RMI 2901 Homework # 8 10 Points Spring 2011 Due Tuesday, April 5, 2011 LABEL ALL QUESTION PARTS If questions are not labeled, I cannot give any credit for the answers. 1. Tracey and Randy are next-door neighbors. Tracey has a big party at her house for the 4 th of July and is using fireworks to celebrate. Unfortunately, she does not exercise the care a reasonably prudent person would exercise in order to prevent injury or loss and manages to set Randy’s house on fire. The fire does $300,000 worth of damage to Randy’s house. Both Randy and Tracey are insured by two different insures and both of them have a property policy that includes general liability coverage. Randy’s property insurance policy has a face amount of $260,000. Tracey’s liability coverage has a face amount of 1 million dollars. a. Randy submits a claim to his insurer for the total cost of the damages. How much does he recover and why? (3 points) [1 sentence] b. Randy’s insurer exercises its subrogation rights and recovers $200,000 from
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Unformatted text preview: Tracey. How much of the $200,000 does the insurer keep and what happens to any subrogation funds not kept by the insurer? Explain your answer. (3 points) [2 sentences] 2. Donald owns a $4,000,000 building in NY and pays the entire premium for the property insurance on January 1, 2009. On March 15, 2009, Donald sells the building to Warren but Donald forgets to cancel his property insurance. On July 4, 2009, the building is destroyed in a fire. a. Donald makes a property insurance claim. Will his property insurer pay the claim? Explain your answer using an insurance contract ‘principle’. (2 points) [2 sentences] b. Name the violation of a characteristic/requirement of an insurable risk this principle is mitigating and explain how the principle mitigates this violation. (2 points) [2 sentences] You will hand this in as a separate assignment from HW #8. Do not staple this to HW #8. We will collect HW #8 and HW #9 separately on Tuesday. 1...
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