Final answer:
Increasing bodily injury liability usually leads to a higher premium due to the insurance company's increased risk exposure. An exact figure for the increase cannot be given without specific details, but generally, a tenfold increase in coverage limit would result in a significant rise in the premium, which aligns with typical insurance and risk assessment principles.
Step-by-step explanation:
The question pertains to the increase in premium for automobile insurance when the bodily injury liability is raised from $25,000 to $250,000. This scenario does not provide specific premium amounts for the increase, which makes it impossible to give an exact answer. However, we can discuss this generally.Typically, increasing coverage limits leads to a higher premium because the insurance company takes on more risk. In the example provided, all drivers pay a $1,860 premium for a collective pool of $186,000, which covers the costs of various levels of accidents without factoring in different risk categories. If we applied this to bodily injury liability, the premium increase would depend on many factors, including the insurance company's risk assessment, the driver's profile, and claims history.In general, one might expect a significant increase in premium when raising the coverage limit tenfold, as in the example from $25,000 to $250,000, because the potential payout the insurance company would have to make in the event of an accident is much greater. This is typically in alignment with what one would expect in the world of insurance premiums and risk assessment.The main answer to the question is that, while an exact figure cannot be provided without specific data, increasing bodily injury liability coverage limits would generally result in a higher premium. This is expected due to the nature of insurance, which is to spread the risk among all insured to cover the potential costs of claims.