Final answer:
The statement is False. Auto insurance premiums are used to cover various expenses, including lawsuits, but they do not account for more than half of each dollar.
Step-by-step explanation:
The statement, 'More than half of every dollar of auto insurance premiums received by insurance companies is used to cover costs associated with lawsuits,' is False. While it is true that insurance companies allocate funds for covering costs associated with lawsuits, it is not accurate to say that more than half of every dollar is used for this purpose.
Insurance companies have many other expenses to cover, including claims, administrative costs, and generating profits.
When individuals pay for auto insurance, the payments are used to cover the average person's claims, the costs of running the insurance company, and leaving room for the company's profits. Additionally, insurance companies classify individuals into risk groups, where those with lower risks pay lower premiums.
This system ensures that everyone pays their fair share and prevents those with low risks from subsidizing those with high risks. Therefore, while lawsuits are a factor, they do not account for more than half of every dollar of auto insurance premiums.