Total PD losses are made up of which two components?

• A. Normal wear and tear and employee losses
• B. Employee loss physical damage and subrogatable bad debt
• C. Subrogable losses and other losses
• D. Fraudulent claims and rental losses

Answer: (C)

Total PD (Property Damage) losses are comprised of two main components: subrogable losses and other losses. Subrogable losses refer to those incidents where the insurance company has the right to pursue a third party to recover the costs incurred from a claim. This might include accidents where another party is at fault, allowing the insurer to recover claims. Other losses encompass a variety of damages that might not fall under the category of subrogable but nonetheless impact the overall loss experience, such as losses that are covered directly under the policy without any chance of recovery through subrogation.

The combination of these two terms offers a comprehensive view of total PD losses, distinguishing between recoverable and non-recoverable losses. Understanding this distinction is important for companies in managing their risks and understanding the overall financial impact of property damage claims.