Determining insurance net gain

Reference no: EM13100339

An insurance company sells $300 deductible annual automobile insurance policies to a certain category (age, driving records) for $1000.00 The insurance company has set four different accident types, and the probabilities associated with each accident type are given in the table below:

Type of accident Probability
No accident 0.98

Damage caused=$1000 0.01

Damage caused=$3000 0.005

Damage caused=$5000 0.004

Damage caused=$10000 0.001

Let X be the net gain in the insurance company. Construct a tabular probability distribution for X.

Reference no: EM13100339

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