Question

Susie is thinking about changing her auto insurance policy at Fret-No-More Auto Insurance. Her current policy includes the following options: $50/100,000 limit for bodily injury, $25,000 limit for property damage, $250 deductible for collision, and $50 deductible for comprehensive. Which of the following changes would increase Susie’s limits the most without increasing her monthly premium by more than $5.00?
Fret-No-More Auto Insurance
Type of Insurance Coverage
Coverage Limits
Annual Premiums
Bodily Injury
$25/50,000
$21.35

$50/100,000
$32.78

$100/300,000
$42.10

Property Damage
$25,000
$115.50

$50,000
$142.44

$100,000
$193.78

Collision
$100 deductible
$490.25

$250 deductible
$343.33

$500 deductible
$248.08

Comprehensive
$50 deductible
$105.79

$100 deductible
$88.23

a.
Increase coverage on bodily injury to $100/300,000.
b.
Increase coverage on property damage to $50,000.
c.
Increase coverage on bodily injury to $100/300,000 and on property damage to $50,000.
d.
Increase coverage on bodily injury to $100/300,000 and on property damage to $100,000.

Answer 1

First find Susie’s current annual premium:
32.78 + 115.50 + 343.33 + 105.79 = 597.40 annual (≈ 49.78/month).

Evaluate each choice (annual new total, annual increase, monthly increase):

a) BI to $100/300k: new annual = 42.10 + 115.50 + 343.33 + 105.79 = 606.72
annual ↑ = 9.32 → monthly ↑ ≈ $0.78

b) PD to $50,000: new annual = 32.78 + 142.44 + 343.33 + 105.79 = 624.34
annual ↑ = 26.94 → monthly ↑ ≈ $2.25

c) BI to $100/300k and PD to $50,000: new annual = 42.10 + 142.44 + 343.33 + 105.79 = 633.66
annual ↑ = 36.26 → monthly ↑ ≈ $3.02

d) BI to $100/300k and PD to $100,000: new annual = 42.10 + 193.78 + 343.33 + 105.79 = 685.00
annual ↑ = 87.60 → monthly ↑ ≈ $7.30 (exceeds $5/month)

Options a–c all stay within $5/month; d does not. The largest increase in limits while keeping the monthly increase ≤ $5 is option c.