Question

annual premium adjustments based on risk factors
an insurance policy has an annual base premium of $1,200 before adjustments. the final annual premium is influenced by the factors listed.

• driver’s age: increase by $200 if the driver is under 25 years old
• driving record: increase by $300 for any at - fault accidents in the past three years
• type of car: increase by $100 for high - performance vehicles
• chosen coverages and limits: increase by $150 for each additional coverage beyond the standard package

clayton is 24 years old, has one at - fault accident in the past three years, drives a standard vehicle, and selects one additional coverage.
what would his annual premium be after adjustments?
$2,000
$2,150
$1,650
$1,850

Explanation:

Step1: Identify applicable adjustments

Base premium: $1,200. Age: under 25 → +$200. Accident: at - fault → +$300. Car: standard → no adjustment. Coverage: 1 additional → +$150.

Step2: Calculate total premium

Total = 1200 + 200 + 300 + 150 = 1850.

Answer:

\$1,850