• Answers to Case Application

1. .Retention. Because the bike is old and has a limited market value, property insurance should not be
purchased. Retention can be used to deal with the exposure.

2. .Loss control. The Flooding should be carefully checked for possible water running to reduce the possibility
of damage to the apartment. As an alternative, an endorsement can be added to a home owners policy to
cover the liability exposure.

3. . Liability insurance. Because the exposure has the potential for causing a catastrophic loss, auto liability
insurance should be purchased.

4. . Insurance. Property insurance could be purchased to deal with the property exposure of $20,000. The
policy should contain a deductible.

5. .Avoidance. Sarah should pick a new running route.

6. .Health insurance. Sarah should have purchased Health insurance. The loss of Income would have been
replaced by Health insurance.