The claim severity for an auto liability insurance coverage is modeled by a Pareto Type I distribution with shape parameter a = 2.5 and scale parameter e = 1000. The insurance coverage pays up to a...

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Extracted text: The claim severity for an auto liability insurance coverage is modeled by a Pareto Type I distribution with shape parameter a = 2.5 and scale parameter e = 1000. The insurance coverage pays up to a limit of 1200 per claim. Determine the expected insurance payment under this coverage for one claim.