Purchase a Policy

The policy fee denoted PFP_FPF​ is given by the equation
PF=CA.31F+t−c+NM+(AM.AW)ct+(CD.CA)+1C{P_F = C_A. { 3 \over {1\over F} + {{t - c + N_M + (A_M . A_W)} \over {{c \over t} + (C_D . C_A)}} + {1\over C}}}PF​=CA​.F1​+tc​+(CD​.CA​)t−c+NM​+(AM​.AW​)​+C1​3​
where FFFand CCCare constants, ccc is the cover commitment amount, ttt is the total balance of the pool, CDC_DCD​ is the policy duration desired, CAC_ACA​ is the desired cover amount, NMN_MNM​ is NEP provision amount for the cover pool , AMA_MAM​ is assurance token amount for the cover pool, andAWA_WAW​ is the assurance token liquidity weight.
For simplicity, this equation can be broken down further to the following subtopics:
Utilization Ratio
The utilization ratio simply tells us how much liquidity in a given cover pool has already been used. It is denoted as the ratio between cover ommitment and total balance, given the pool has a positive balance.
u=ctu = {c \over t}u=tc​
where ccc is the cover commitment and ttt is the total balance of the pool.
Available Liquidity
The available liquidity is always greater than or equal to the total balance of a cover pool. A cover pool may have additional liquidity available through Assurance Tokens and NEP Provision. The weight of assurance token is a constant.
l=t−c+NM+(AM.AW)l = {t - c + N_M + (A_M . A_W)}l=t−c+NM​+(AM​.AW​)
where ttt is the total balance of the pool, ccc is the cover commitment, NMN_MNM​ is NEP provision amount for the cover pool , AMA_MAM​ is assurance token amount for the cover pool, AWA_WAW​ is the assurance token liquidity weight.
Impact Ratio
The impact ratio signifies the effect of the desired cover amount and duration on the liquidity pool.
i=u+(CD.CA)li = {u + (C_D . C_A) \over l}i=lu+(CD​.CA​)​
where uuu is the current utilization ratio, CDC_DCD​ is the policy duration desired, CAC_ACA​ is the desired cover amount, and lll is the available liquidity.
Policy Fee
Finally, the policy fee (PFP_FPF​) equation can be now derived from a simple harmonic mean of three values: namely floor, impact ratio, and ceiling, denoted as
PF=CA.31F+1i+1C{P_F = C_A. { 3 \over {1\over F} + {1 \over i} + {1\over C}}}PF​=CA​.F1​+i1​+C1​3​
where FFF and CCC are constants, CAC_ACA​ is the desired cover amount, and i is the impact. Check the following sheet which contains this equation.
​https://docs.google.com/spreadsheets/d/1RTSrFnE6sGNd71xcEhzT7Lagpt5EwELHZ75OF8GzA4o/edit?usp=sharing​
Get Fees
import { ChainId, policy } from '@neptunemutual/sdk'
import { info } from './info.js'
import { getProvider } from './provider.js'
import { weiAsPercent, weiAsDollars, ether } from './bn.js'
​
const get = async () => {
  const { key } = info
  const provider = getProvider()
  const args = {
    duration: 2,
    amount: ether(100_000)
  }
​
  console.info('Getting %s cover for %d months', weiAsDollars(args.amount), args.duration)
  console.info('--------------------------------------')
​
  const response = await policy.getCoverFee(ChainId.Mumbai, key, args, provider)
  const {
    fee,
    utilizationRatio,
    totalAvailableLiquidity,
    coverRatio,
    rate
  } = response.result
​
  console.info('Rate: %s', weiAsPercent(rate))
  console.info('Fee: %s', weiAsDollars(fee, 'xYZ'))
  console.info('--------------------------------------')
  console.info('Utilization Ratio: %s', weiAsPercent(utilizationRatio))
  console.info('Total Available Liquidity: %s', weiAsDollars(totalAvailableLiquidity))
  console.info('Cover Ratio: %s', weiAsPercent(coverRatio))
}
​
get()
​
/*****************************************************************************
[info] Getting $100,000.00 cover for 2 months
[info] --------------------------------------
[info] Rate: 16.66%
[info] Fee: $2,776.78
[info] --------------------------------------
[info] Utilization Ratio: 0.00%
[info] Total Available Liquidity: $299,700.00
[info] Cover Ratio: 66.73%
*****************************************************************************/
Result Type
Property
Type
Description
fee
number
The amount required in DAI to purchase the policy for the specified amount. 
utilizationRatio
number
Utilization Ratio = Total Commitment / Total Liquidity
totalAvailableLiquidity
number
Total Available Liquidity = Total Liquidity - Total Commitment + Amount in NEP Provision + Weighted Amount in Assurance Pool 
coverRatio
number
Cover Ratio = Utilization Ratio + Cover Duration * (Amount to Cover / Total Liquidity)
floor
number
The base policy floor rate
ceiling
number
The base policy ceiling rate
rate
number
The annualized percentage required to purchase this policy for the specified amount
Purchase Policy
import { ChainId, policy } from '@neptunemutual/sdk'
import { info } from './info.js'
import { getProvider } from './provider.js'
import { ether } from './bn.js'
​
const purcahse = async () => {
  const { key } = info
  const provider = getProvider()
​
  const args = {
    duration: 2,
    amount: ether(10_000) // <-- Amount to Cover (In DAI)
  }
​
  // First approve the Policy contract to spend your DAI, USDC, or BUSD
  await policy.approve(ChainId.Mumbai, {}, provider)
​
  const response = await policy.purchaseCover(ChainId.Mumbai, key, args, provider)
  console.info(response)
}
​
purcahse()
​
/*****************************************************************************
[info] {
  status: 'Success',
  result: {
    nonce: 1,
    gasPrice: BigNumber { _hex: '0x06fc23ac00', _isBigNumber: true },
    gasLimit: BigNumber { _hex: '0x2f788c', _isBigNumber: true },
    to: '0x50443BED0C90987D3A3715f0A90e60503BB548dD',
    value: BigNumber { _hex: '0x00', _isBigNumber: true },
    data: '0x02bbd6e570726f746f3a636f6e7472616374733a636f7665723a6366633a303100000002000000000000000000000000000000000000000000000000000000000000000200000000000000000000000000000000000000000000021e19e0c9bab2400000',
    chainId: 80001,
    v: 160038,
    r: '0xc6539f52dfb2fc026bdef71082dccdcfd886fa6cef06c1d507ba18d1bbe6ed33',
    s: '0x2b2ca2256d0a9513bc503e5f8496f54def3b2fb2ef9e2a988a0f21167a3c7cbe',
    from: '0x076F91C0A411197e6Fce476F37c6385CCeacd26D',
    hash: '0x1e6d351385c19d13e7e08fb372d23100d8000ef916909b18fabeb40252f9eb47',
    type: null,
    wait: [Function (anonymous)]
  }
}
*****************************************************************************/
​

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Property	Type	Description
fee	number	The amount required in DAI to purchase the policy for the specified amount.
utilizationRatio	number	Utilization Ratio = Total Commitment / Total Liquidity
totalAvailableLiquidity	number	Total Available Liquidity = Total Liquidity - Total Commitment + Amount in NEP Provision + Weighted Amount in Assurance Pool
coverRatio	number	Cover Ratio = Utilization Ratio + Cover Duration * (Amount to Cover / Total Liquidity)
floor	number	The base policy floor rate
ceiling	number	The base policy ceiling rate
rate	number	The annualized percentage required to purchase this policy for the specified amount