-23-
for fiscal years 1988 and 1989 because the cost of cows
increased. Petitioner estimated that it would receive a
slaughter price of $400 for each cow. Thus, petitioner's board
had a reserve of $3,300,000 in fiscal year 1987 (6,000 cows x
$550), and $3,900,000 in fiscal years 1988 and 1989 (6,000 cows x
$650) to cover losses to the dairy herd in the event of disease
or other disaster.
b. Liability Insurance
Petitioner bought commercial liability insurance and funded
a reserve for self-insurance for risks above $5,000,000 in the
years in issue.
During the years in issue, petitioner was covered by
Insurance Company of North America (INA) primary liability
insurance policies.7 Petitioner had the following commercial
liability insurance policies:
7 Some of petitioner's insurance policies provided per
occurrence coverage and others provided aggregate coverage. A
per occurrence policy pays up to the amount of the policy for
each covered loss. An aggregate policy pays no more than the
amount of the policy during the policy period regardless of the
number of claims.
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