Question

In order to lower his monthly auto insurance bill, Henry has decided to change his existing policy by increasing the deductible for both collision and comprehensive insurance to the highest amount permitted by his insurance company, AA Auto Insurance. His current monthly auto insurance bill, which includes a $250.00 deductible for collision and a $50.00 deductible for comprehensive, is $43.79. How will Henry's monthly auto insurance bill be affected by the change?
AA Auto Insurance
Type of Insurance Coverage

Coverage Limits

Annual Premiums

Bodily Injury

$25/$50,000

$22.50


$50/$100,000

$31.75


$100/$300,000

$40.25

Property Damage

$25,000

$120.50


$50,000

$144.75


$100,000

$193.00

Collision

$100 deductible

$520.00


$250 deductible

$415.25


$500 deductible

$275.75

Comprehensive

$50 deductible

$110.25


$100 deductible

$100.00


a.
$12.48
b.
$31.31
c.
$149.75
d.
$275.75

Answer 1

New collision annual = $275.75 (for $500 deductible)
New comprehensive annual = $100.00 (for $100 deductible)
Total annual = $375.75 → monthly = 375.75/12 = $31.31

So his monthly bill becomes $31.31 (a reduction of $12.48). Answer: b.