Question

Premiums for automobile accident insurance are higher for red cars than for cars of other colors. To that, overall, a greater percentage of red cars are involved in accidents than are cars of any other color. If this claim is true, then lives could undoubtedly be saved by banning red cars from the road all together.

a. true
b. false

Answer 1

Insurance companies classify people into risk groups based on driving history to set premiums. The claim that premiums for red cars are higher due to a greater accident percentage is not true.

Step-by-step explanation:

Insurance companies often classify people into risk groups based on their driving history, and charge lower premiums to those with lower risks. If people are not separated into risk groups, then those with low risk would have to pay for the higher risks of others. The claim that premiums for red cars are higher because a greater percentage of red cars are involved in accidents is not necessarily true. The color of the car itself does not cause accidents; rather, it is the driving behavior and factors like age, gender, and driving history that determine the risk. Banning red cars from the road altogether would not necessarily save lives, as accidents can occur regardless of the car color.