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Report - PEER - University of California, Berkeley

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motivation to change the way they were spending money. The result was that theowner got more value without additional cost.Current condition (with insurance)Year 1-Max. potential loss $3,000,000Annual expected loss ($15,000)Annual expected insurance recovery $7,500Annual insurance cost ($40,000)Total annual costs ($47,500)Mitigation condition (without insurance)Year 1-4Max. potential loss $3,000,000Annual expected loss ($15,000)Annual expected insurance recovery $0Annual insurance cost $0Annual mitigation cost ($40,000)Total annual costs ($55,000)Year 5 and beyondMax. potential loss $750,000Annual expected loss ($3,750)Annual expected insurance recovery $0Annual insurance cost $0Annual mitigation cost $0Total annual costs ($3,750)Net rate <strong>of</strong> return on mitigation over 20 years 62%Figure 6. Example analysis <strong>of</strong> value <strong>of</strong> insurance versus mitigation.111

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