Question

why does geographic location affect the cost of premiums? (1 point)

there are less car mechanics in certain areas so the cost to repair is higher.

because people in urban areas tend to buy flashier cars.

because insurance companies review the statistical history of claims for an area and if there is an increased risk of claims for accidents or theft, they will raise the premium.

because insurance companies believe that people in urban areas should use mass transit.

Explanation:

To determine the correct answer, we analyze each option:

• The first option about car mechanics' quantity is not the main reason for premium cost variation based on location.
• The second option about buying flashier cars in urban areas is not a standard factor for insurance premiums related to location.
• The third option is correct because insurance companies base premiums on risk, and they assess the statistical history of claims (like accidents or theft) in an area. Higher risk in an area leads to higher premiums.
• The fourth option about insurance companies' belief in mass transit use is not a valid reason for premium cost based on location.

Answer:

C. Because insurance companies review the statistical history of claims for an area and if there is an increased risk of claims for accidents or theft, they will raise the premium.