Question

Marcus James was paying $950 per year for full coverage under an auto insurance policy and then decided to change to a liability coverage only policy that cost $650 per year. Three years after changing the coverage, Marcus paid $1,400 to repair damages to his car resulting from an accident that did not involve another vehicle. What was the net cost or savings to Marcus as a result of reducing his insurance coverage to liability only?​

Answer 1

Marcus had a net savings of $500 as a result of reducing his insurance coverage to liability only.

Step-by-step explanation:

Marcus James was paying $950 per year for full coverage under an auto insurance policy and then decided to change to a liability coverage only policy that cost $650 per year. To find the net cost or savings to Marcus as a result of reducing his insurance coverage to liability only, we need to calculate the difference between the costs of the two policies and subtract any expenses he incurred after the change.

Cost of full coverage policy: $950 * 3 years = $2850

Cost of liability coverage policy: $650 * 3 years = $1950

Net savings = Cost of full coverage policy - Cost of liability coverage policy - Expenses after changing coverage

Net savings = $2850 - $1950 - $1400 = $500

Therefore, Marcus had a net savings of $500 as a result of reducing his insurance coverage to liability only.

Answer 2

He saves 3600 a year, - the 1400 he saved 2200