Question

Many insurance companies carry a deductible provision that states how much of a claim you must pay out of pocket before the insurance company pays the remainin expenses. Suppose you have a car insurance policy with a $900 deductible provision (per claim) for collisions. During a 2-year period, you file claims for $550 and $1325. The annuanl premium for the policy is $400. Determine how much you would pay with and without the insurance policy

with policy $1775, w/o $2225

w/p $2600, w/o $1875

w/p $1850, w/o $1875

w/p $2250, w/o $1875

Answer 1

Deductible provision	=	$900
i.e. if claim submitted upto $900 nothing ais paid by insurance company
whole amount upto $900 paid by insurer.
So amount paid on claims
$550	=	$550	nothing paid by insurance
$1,325	=	$900	$ 425 paid by insurance
So total amount paid on claims		$1,450
add: 2 yrs insurane premium ($400 x 2 yrs)		800
Total paid with insurance		$2,250	(1450+800)
Total paid without insurace		$        1,875
(550+1325)
So ans is d w/p $2250, w/o $1875