Alternative to full insurance construct loss matrix

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Frank owns a delivery truck with $60000 The truck is subject to risk of physical damage with the following loss probability distribution. Annual losses = $0, probability .85, $10000 and probability .14 and $60000 and probability .01. Frank's risk manager is considering three risk management options to manage this risk. Frank can purchase full insurance on this truck for the risk of physical damage up to a total loss of $60000 for a premium of $2500. Frank can purchase insurance with a limit of $60000 and a deductible of $1000 for a premium of $2200. Frank is also considering retention as an alternative to full insurance Construct a loss matrix.

Reference no: EM132111676

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