Question

Assume that the probability of a driver getting into an accident is 7.6%, the average cost of an accident is $16,412.05, and the overhead cost for an e company per insured driver is $105. What should be this drivers insurance premium?

Answer 1

1,352.32

Explanation:

If you take 7.6 and multiply it to 16,412.05 (.076)(16,412.05), you get 1,247.32. You then add the overhead cost of 105 to get 1352.32. (Apex verified too)

Answer 2

The drivers insurance premium is:

$ 1352.3158

Explanation:

The probability of a driver getting into an accident is 7.6%.

The average cost of an accident is $16,412.05.

This means that the expected amount that will be paid to each of the driver by the company on accident will be: 0.076×16412.05

= $ 1247.3158

Also, the overhead cost for an e company per insured driver is $105.

This means that the insurance premium of driver is:

= 105+1247.3158

= $ 1352.3158