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    Question

    2000 factories require a Sum Insured of Rs.10 crores

    each. Statistically, we know that 2 factories get destroyed by fire each year. However, we do not know which two . So, if the losses are to be paid for by all of the 2000 factory owners, what should be the contribution by each factory owner by way of pure premium?
    A Rs. 75,000 Correct Answer Incorrect Answer
    B Rs. 1,00,000 Correct Answer Incorrect Answer
    C Rs. 2,00,000 Correct Answer Incorrect Answer
    D Rs. 3,00,000 Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Total annual loss: Rs. 10 crores * 2 factories = Rs. 20 crores Contribution per factory: Rs. 20 crores / 2000 factories = Rs. 10,000 Therefore, the contribution by each factory owner by way of pure premium is Rs. 10,000.  

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