An Automobile Insurance Company Estimates the Following Loss Probabilities for the Next

question 119

Essay

An automobile insurance company estimates the following loss probabilities for the next year on a $25,000sports car: $$\begin{array} { l r } \text { Total loss: } & 0.001 \\50 \% \text { loss: } & 0.01 \\25 \% \text { loss: } & 0.05 \\10 \% \text { loss: } & 0.10\end{array}$$ Assuming the company will sell only a $500 deductible policy for this model (i.e., the owner covers the first$500 damage), how much annual premium should the company charge in order to average $325 profit perpolicy sold?

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Definitions:

Perceptual

Relating to the ability to interpret or become aware of something through the senses.

Impact

The effect or influence of one factor on another, which may refer to social, economic, environmental, or personal outcomes.

Environmental

Pertaining to the natural world or the ecological conditions that affect organisms and human societies.

Exception Questions

Inquiries made to help an individual identify times when the problem they are dealing with was not present or was less problematic, often used in solution-focused therapy.