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Homework answers / question archive / Mini-Case The Bookworm is a bookstore and café located on a busy downtown main street in Denver

Mini-Case The Bookworm is a bookstore and café located on a busy downtown main street in Denver



The Bookworm is a bookstore and café located on a busy downtown main street in Denver. The owner, Waata Reader, prides himself on the vast selection of books available in the store. The store has three stories, with both stairs and an elevator to each level. In the back of the first floor is the café, which serves pastries and coffee drinks. Many times customers will linger there over a cup of coffee, deciding which book to purchase. Waata has expanded several times and now has 22 people on the staff.




  1. Bookworm sales have been down for the last year due to new competition from a national chain and Waata is understandably concerned. He recently called his insurance agent to see if this downturn in sales was covered by his business policy. The agent, Will be Safe, told Waata:
  1. he could submit a claim and most likely the company would cover it.
  2. market risks are uninsurable and in fact, his business policy does not cover those.
  3. personal risks such as the decrease in his store's sales are not insurable.
  4. the company would definitely cover Waata's losses.


  1. One of Waata's staff members has been out on sick leave because she had an emergency appendectomy. She brought the hospital bills in to Waata for his opinion. It seems she had been covered by two health insurance policies for some time and now she thinks she may be able to collect from both companies in payment for the operation. Waata assured his employee that:
    1. she could look forward to a check from both companies once they had paid the medical bills.
    2. because of the rule of indemnity she would not be able to profit from her operation.
    3. because of the law of large numbers both insurance companies would pay her directly.
    4. because her risk was insurable, she would be able to collect from both insurance policies.
  2. When one of Waata's employees was stocking a particularly high shelf one morning he reached a bit too far and fell off the ladder. Luckily he just broke his arm and returned to work later that day. His medical bills due to this accident were covered under:
    1. workers' compensation.
    2. disability insurance.
    3. liability insurance.
    4. his own health insurance.
  3. One afternoon Waata was called to the café. One of Waata's staff had inadvertently spilled hot coffee on a customer's arm and the customer was left with a burn. Waata sent the customer off to the local hospital for treatment knowing that his         insurance would cover the claim.
    1. extended product liability
    2. malpractice
    3. public liability
    4. major medical

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