Question

a car owner pays an annual premium of $780 for automobile insurance, including liability coverage of up to $100,000. the car owner pays this for nine years without needing to file a single claim. then the car owner causes an accident for which the other driver is claiming $32,000 in damages. how much more expensive were the costs of the accident than what the car owner paid in premiums? $24,980 $100,000 $7,020 $39,020

Answer 1

The costs of the accident were $24,980 more expensive than what the car owner paid in premiums.

Step-by-step explanation:

The car owner pays an annual premium of $780 for automobile insurance, including liability coverage of up to $100,000. The car owner has paid this premium for nine years without needing to file the claim. Let's calculate the total amount the car owner has paid in premiums over nine years:

Total premium paid = Annual premium x Number of years = $780 x 9 = $7020

Now, let's calculate how much more expensive the costs of the accident ($32,000) are compared to the premiums paid:

Cost of accident - Premiums paid = $32,000 - $7020 = $24,980

Therefore, the costs of the accident were $24,980 more expensive than what the car owner paid in premiums.

Answer 2

The cost of the accident was $24,980 more expensive than the total amount paid in premiums by the car owner over nine years, which was $7,020.

Step-by-step explanation:

The car owner paid an annual premium of $780 for nine years, amounting to a total of $7,020 ($780 x 9 years). After causing an accident with damages claimed at $32,000, we need to determine how much more expensive the accident costs were compared to the paid premiums.

To do this, we subtract the total amount paid in premiums from the cost of the accident:

• $32,000 (claimed damages) - $7,020 (premiums paid) = $24,980

Therefore, the cost of the accident was $24,980 more expensive than what the car owner paid in premiums over the nine years.