Student Worksheet
Name:__________________
Insurance Company X calculates their rates in the following way:
 Their liability, collision and comprehensive insurances are based on the state averages (in
the table below) with a $1,000 deductible and a car worth $10,000
 For every $1 change in the value of a car, the base insurance rate changes by $0.025 (this
means that a car worth $20,000 is worth $10,000 more than the base rate – so $10,000 x
0.025 = $250 - $250 more than the base rate.)
 If a driver opts for a $500 deductible, add $30 on to each type of insurance carried
 If a driver opts for a $1,500 deductible, subtract $35 on to each type of insurance carried
 Insurance for drivers below the age of 21 is twice the state average
 For each accident that a driver has, liability and collision increase by 20%
Thinking about insurance…
1
1. What types of insurance would you want to carry for a car worth: (explain why)
a. $500
b. $2,000
c. $15,000
d. $35,000
2. If you are more prone to getting into accidents, would that change your answers for #1?
3. How would you go about choosing which deductible to select?
Based on the following scenarios, calculate the annual insurance premium with Insurance
Company X. Show all of your work.
4. Age: Adult
State: Utah
Types of insurance wanted: Liability, collision, and comprehensive
Value of car: $12,000
Deductible desired: $1,000
Number of accidents: 0
5. Age: Teen
State: New York
Types of insurance wanted: Liability and comprehensive
2
Value of car: $500
Deductible desired: $1,500
Number of accidents: 1
6. Age: Adult
State: Pennsylvania
Types of insurance wanted: Liability and collision
Value of car: $35,000
Deductible desired: $500
Number of accidents: 3
7. Age: Teen
State: California
Types of insurance wanted: Liability, collision and comprehensive
Value of car: $10,000
Deductible desired: $1000
Number of accidents: 1
8. Age: Teen
State: Pennsylvania
Types of insurance wanted: Liability only
Value of car: $6,000
Deductible desired: $1,500
Number of accidents: 0
3
9. Which of the car insurance scenarios has an element that does not make sense? (Hint:
look at the types of insurances selected, the value of the cars, and the deductible
amounts.)
10. Which scenario (#4 – 8) had the most expensive annual premium? What were the factors
that contributed to this?
11. Which scenario (#4 – 8) had the least expensive annual premium? What were the factors
that contributed to this?
12. If all of the drivers in the above scenarios ran their cars into trees and were damaged
beyond repair, would the cars be replaced by the insurance company? And how much
would the drivers need to pay? (Make sure to take into consideration the types of
insurance carried by each of the drivers and their respective deductibles.)
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13. If all of the cars in the above scenarios were damaged beyond repair by a natural disaster,
would the cars be replaced by the insurance company? And how much would the drivers
need to pay? (Make sure to take into consideration the types of insurance carried by each
of the drivers and their respective deductibles.)
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