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“A Federal Reserve Board survey showing that banks are still making commercial real estate loans for ‘high profile’ properties does not tell the whole story of the impact of problems in the terrorism insurance market, insurance industry officials contend” (Steven Brostoff, “Loans Still Coming Despite Terror Risks,” National Underwriter, Property & Casualty/Risk & Benefits Management Edition, June 3, 2002).
Kevin Kaiser just replaced his old car with a new one and is ready to drive the new car off the lot. He did not have collision insurance on the old car, but he wants some on the new one. He calls his friend Dana Goldman, who is an insurance agent. “Give me the works, Dana. I want the best collision coverage you have.” Soon after he drives the car away from the lot, he is struck by an eighteen-wheeler and the new car is totaled.
Kevin then discovers that he has collision insurance with a $500 deductible, which he must pay. He is upset because to him “the works” meant full insurance for all losses he might have due to collision. Dana had thought that he wanted more cost-efficient coverage and had used the deductible to lower the premium. The applicable state law and insurer underwriting practices allow deductibles as low as $250, although they can be much higher.
A. J. Jackson was very pleased to hear the agent say that she was covered the moment she finished completing the application and paid the agent the first month’s premium for health insurance. A. J. had had some health problems previously and really didn’t expect to be covered until after she had taken her physical and received notice from the company. The agent said that the conditional binder was critical for immediate coverage. “Of course,” said the agent, “this coverage may be limited until the company either accepts or rejects your application.” The agent congratulated A. J. again for her decision. A. J. began to wonder the next morning exactly what kind of coverage, if any, she had.
LeRoy Leetch had a heck of a year. He suffered all the following losses. Based on what you know about insurance, which would you expect to be insurable and why?