Scott Had Trouble Obtaining Auto Insurance

question 20

Multiple Choice

Scott had trouble obtaining auto insurance.After three companies refused to insure him,he called the state insurance department.A representative suggested he obtain coverage through Last Chance Insurance Company because "that's all they insure-high-risk drivers." Scott contacted Last Chance.He was not refused coverage;however,the premium Scott was required to pay was three times greater than the average premium in the market.Last Chance Insurance Company is a(n)

• A)reinsurance facility.
• B)automobile insurance plan.
• C)specialty auto insurer.
• D)joint underwriting association.

---

Definitions:

Cost Estimates

A predictive calculation of the anticipated expenses for a project or production, used for budgeting and planning purposes.

Marginal Cost

The cost of producing one additional unit of a product or service.

Relevant Range

The range of activity or volume in which the assumptions about fixed costs and variable costs are valid.

Variable Cost

Costs that fluctuate with the level of output, such as materials and labor directly involved in production.