Final answer:
An unclear context about two individuals named Bill and Bob makes it impossible to determine insurance payouts in their hypothetical scenario. However, by explaining the given automobile insurance example, we see how 100 drivers collectively cover $186,000 in damages through equal premium payments of $1,860, highlighting the principle of risk sharing in insurance.
Step-by-step explanation:
The initial question seems incomplete, as it does not provide enough context or information about Bill and Bob, or the conditions of the property policy. However, I can provide a detailed explanation about how insurance premiums work using the information provided about automobile insurance. In this instance, each of 100 drivers pays a $1,860 premium annually. This results in a total collection of $186,000 for the insurance company, which is exactly the amount needed to cover the costs of the accidents that occur among these drivers within that year.
Understanding Insurance Payouts
In the example given, minor incidents resulted in $100 of damage for 60 drivers, medium-sized accidents cost $1,000 each for another 30 drivers, and 10 drivers experienced major accidents with damages totaling $15,000 each. While the exact amount each driver would receive from their insurance claim is not specified in the question, it is implied that the premiums collected are distributed to cover these costs. This is a good illustration of how insurance works: everyone in the pool contributes to cover the risks faced by the group as a whole.
When high-risk and low-risk drivers are not classified into different groups, the low-risk drivers effectively subsidize the costs for the high-risk drivers. This is because all 100 drivers pay the same premium, regardless of the actual cost of the accidents they experience individually. This sharing of risk is fundamental to the insurance model, which is designed to spread costs and minimize the financial impact for all those insured.