Final answer:
Statement B is not true as the percentage of premiums used for lawsuit costs varies, and it's not a fixed ten percent. No-fault insurance programs do not hold a specific driver liable, auto insurance fraud inflates premium costs, and having auto insurance is legally required for drivers.
Step-by-step explanation:
The correct answer to the question "Which of the following statements regarding auto insurance is not true?" is B) Ten percent of every dollar of auto insurance premiums is used to cover lawsuit costs. This statement is not generally true because the percentage of premiums used to cover lawsuit costs can vary significantly and is not a fixed amount. Thus, it cannot be stated universally that precisely ten percent of every dollar is utilized for lawsuit costs.
Auto insurance is a mandatory requirement for drivers to protect against financial loss due to accidents or other damages. No-fault insurance programs, for instance, allow for claims to be paid without the need to determine liability. Auto insurance fraud and the need to have auto insurance to drive a car are both valid points contributing to the cost of premiums and the laws governing vehicle operation, respectively.
Insurance companies use risk grouping to ensure that those with lower risks pay lower premiums. This is demonstrated in an example where the total damage incurred by 100 drivers costs $186,000, and if all drivers paid the same premium of $1,860, it would not be risk-adjusted. Such a flat-rate payment system would mean those with lower damages subsidize those with higher claims.