Question

an insurance company offers two different car insurance policies.
policy a has a base premium of $1,250 per year, which can be reduced by selecting a higher deductible. policy b starts at $1,125 per year with no option for a deductible adjustment but offers a discount for installing safety features in the car.
alberto is comparing two car insurance policies.
policy a details: choosing a higher deductible reduces the premium by 8%.
policy b details: installing safety features grants a 5% discount.
choose the correct answer from the drop - down menus to complete the statement.
policy drop - down will have a higher annual premium by drop - down with $25.00, $56.25, $81.25, $100.00

Explanation:

Step1: Calculate adjusted premium for Policy A

Policy A base premium: $1,250. Reduced by 8% (choosing higher deductible).
Adjusted premium for A: \( 1250\times(1 - 0.08)=1250\times0.92 = 1150 \) dollars.

Step2: Calculate adjusted premium for Policy B

Policy B base premium: $1,125. Discount of 5% (installing safety features).
Adjusted premium for B: \( 1125\times(1 - 0.05)=1125\times0.95 = 1068.75 \) dollars.

Step3: Find the difference

Subtract B's premium from A's: \( 1150 - 1068.75 = 81.25 \) dollars.
Thus, Policy A has a higher premium by $81.25.

Answer:

Policy A will have a higher annual premium by $81.25