Question

After reviewing her driving record for the past 3 years, Cindy’s insurance company offers her a good driver discount of 4.5%. Her original policy was based on the premiums listed below. What is her new annual premium including the discount?

Cindy's Auto Insurance Policy
Type of Insurance Coverage
Coverage Limits
Annual Premiums
Bodily Injury
$50/100,000
$31.75
Property Damage
$25,000
$120.50
Collision
$500 deductible
$275.75
Comprehensive
$100 deductible
$100.00

a.
$504.24
b.
$523.50
c.
$528.00
d.
$551.76

Answer 1

First add the annual premiums: 31.75 + 120.50 + 275.75 + 100.00 = 528.00.

Discount = 4.5% of 528 = 0.045 × 528 = 23.76.

New annual premium = 528.00 − 23.76 = 504.24.

Answer: (a) $504.24.