2.4k views
3 votes
If a collision results in an injury, death, or property damage __$ or more, you must file a collision report within __ days.

A) $500, 5
B) $1,000, 10
C) $2,000, 15
D) $5,000, 20

User Dynite
by
8.1k points

1 Answer

2 votes

Final answer:

The correct answer to the student's question is B) $1,000, 10. This example demonstrates the necessity of automobile insurance, where a group of 100 drivers collectively pays premiums to an insurance company, which then uses that money to cover the total yearly damages of $186,000 from accidents.

Step-by-step explanation:

If a collision results in an injury, death, or property damage of $1,000 or more, you must file a collision report within 10 days. The correct answer to the student's question is B) $1,000, 10.

To understand why automobile insurance is necessary and how it works, consider this scenario: Suppose we have a group of 100 drivers. In one year, 60 drivers have minor accidents with damages costing $100 each; 30 drivers have more significant accidents costing $1,000 each; and 10 drivers have severe accidents costing $15,000 each. Without any way to predict who will fall into which risk category, insurers spread the risk across all drivers. The total damages in a year for this group would be $186,000. If each of the 100 drivers pays an insurance premium of $1,860 annually, the insurance company would collect enough money to cover the damages.

User ReenignE
by
7.5k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.