Mr. Green Tea has decided to purchase its new manufacturing…
Mr. Green Tea has decided to purchase its new manufacturing facility in Keyport, NJ. This new facility is worth $1.2 million, and will be the key source of producing Mr. Green Tea’s line of products. Rich and Michael are worried about a major loss occurring at the manufacturing facility, such as a fire or natural disaster. Although these events are very unlikely (low frequency); it presents the possibility of causing very consequential damage (high severity loss) to Mr. Green Tea’s real property (the building itself) and all of the personal property within the building (machinery, equipment, inventory, etc.). Due to this Rich and Michael are considering purchasing a property insurance policy with Nationwide, which will cover Mr. Green Tea’s real and personal property assets. Which form of risk treatment is the underlined portion an example of?