Many insurance policies carry a deductible provision that states how much of a claim a person must pay out of pocket before the insurance company pays the remaining of the expenses. For example, if someone

files a claim for $350 on a policy with a $200 deductible, he or she pays $200 and the insurance company pays $150. In the following cases, determine how much a person would pay with and without an insurance

policy. Complete parts (a) through (d) below.

a. A person has a car insurance policy with a $600 deductible provision (per claim) for collisions. During a two-year period, the person files claims for $550 and $900. The annual premium for the policy is $600.

With the insurance policy, the person would pay $. Without the insurance policy, the person would pay $

(Type whole numbers.)

b. A person has a car insurance policy with a $300 deductible provision (per claim) for collisions. During a two-year period, the person files claims for $550 and $1300. The annual premium for the policy is $650.

With the insurance policy, the person would pay S. Without the insurance policy, the person would pay $

(Type whole numbers.)

C. A person has a car insurance policy with a $1200 deductible provision (per claim) for collisions. During a two-year period, the person files claims for $250 and $1600. The annual premium for the policy is $400.

With the insurance policy, the person would pay $. Without the insurance policy, the person would pay $

(Type whole numbers.)

d. Explain why lower insurance premiums go with higher deductibles. Choose the correct answer below.

A. The insurance company does not want to make a profit, low premiums attract more customers.

B. The insurance company aims to make a profit, so they have to offset for the low premium with a high deductible.

C. High deductibles attract more customers.

D. If the premium is low the insurance company will make a higher profit during high claims.