This exercise is designed to test your knowledge and skills in shopping for auto insurance and demonstrate how insurers price and underwrite this coverage. Your task is to obtain premium quotes for auto insurance on your car or a hypothetical car if you dont own one.

You may shop and obtain personal auto insurance quotes from Progressive at http://www.progressive.com/home/home/.You can use Progressive as your base company or another company of your choice if you use another company you can substitute it in the places where I refer to Progressive below. You will be asked certain information in order to obtain a quote, so you should be prepared to answer the questions accurately. Also, you will be asked questions about the coverages you want. You should use the provisions I list below or develop your own but I would like you to use the deductible amounts I list below. Note: it is preferable that you use Progressive as your base company as its website allows you to obtain comparative quotes from certain other insurance companies.

The objectives of this exercise are to have you undergo the shopping experience for auto insurance, reflect on why the premium quotes for various insurers differ and determine the incremental cost of: 1) lower physical damage deductibles; and 2) higher liability limits. I have provided advice on how to complete this exercise on a separate document Shopping for Auto Insurance that is also posted on Blackboard. You should read this document to help you with this exercise.

All answers must be typed, not handwritten.

Underwriting Information

Your Age:___________________________________

Vehicle: Year/Make/Model________________________

Suggested Coverages (You can start with a different set if you like but you must indicate what they are in your answers below)

Liability Limits: 25,000/50,000/25,000

Medical Payments: $1,000

Uninsured Motorists: Yes (same as liability limits)

Comprehensive Deductible: $1,000

Collision Deductible: $1,000

Rental Car Reimbursement $30 per day

Decline other coverages

1. Using the table below, show the amount of the quote you received from Progressive and its breakdown by coverage? [Note: you should show the 6-month amount, i.e. paid in full, NOT the amount you would pay each month] The Progressive website sometimes allows you to obtain comparative rates from certain other companies. If you were able to obtain comparative rates from other companies, how did their rates vary from Progressive. Alternatively, you may obtain a comparative quote from GEICO at https://www.geico.com/. Or other insurance company such as State Farm, Hanover.

Coverage	Limits/Deductibles*	6-Month Premium
Bodily Injury & Property Damage Liability	$25,000 per person $50,000 per accident $25,000 property damage
Uninsured Motorists Bodily Injury	25,000 per person $50,000 per accident
Uninsured Motorists Property Damage	$25,000
Medical Payments	No coverage
Comprehensive	$1,0000 deductible
Collision	$1,000 deductible
Rental Car Reimbursement	$30 per day
Roadside Assistance	No Coverage
Total

*If you choose difference coverages and policy limits than what are shown in the second column then change what is shown in this column according to the coverages and policy limits you chose.

2. Discuss why different insurance companies charge different premiums for the same person, vehicle, and coverages (you can reflect on your own experience and/or why this happens to people generally). This phenomenon in discussed in the reference document but you should use your own words in answering this part of the question.

3. After you have received a quote based on your initial coverage selection, lower your deductibles from $1,000 to $500 and obtain a revised quote from Progressive. How did the quote change and why? What is the premium cost of purchasing lower versus higher deductibles?

4. Starting from the initial coverage package and quote, raise your liability limits. How does firms quote change and why? What is the premium cost of higher versus lower liability limits? How does the cost of lower deductibles compare with the cost of increased limits and what does this imply about optimizing your expenditures on auto insurance?