Jeff Steel Inc. is a large company with 3000 employees. During the past 10 years, the average worker's compensation loss for the company is stably around $200,000. This year, the risk manager for workers compensation decides to self-insure the firm's workers compensation risk and purchase excess insurance from AIG to prevent catastrophic losses. The firm purchases an aggregate excess insurance policy with $200,000 aggregate retention. The maximum limit of the policy is $1,000,000. During the policy year, the firm has four losses from separate occurrences: Occurrence #1: $50,000; Occurrence #2: $70,000; Occurrence #3: $30,000; Occurrence #4: $130,000. How much will AIG pay for these losses in total? Select one: a. $150,000 b. $80,000 c. $200,000 d. $280,000 e. nothing
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Total losses = Occurrence #1 + Occurrence #2 + Occurrence #3 + Occurrence #4 Total losses = $50,000 + $70,000 + $30,000 + $130,000 Total losses = $280,000 Show more…
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