Question

Jerry is currently insured through AA Auto Insurance, but would like to lower his auto insurance premium by at least $10 per month. His current insurance plan includes the $50/100,000 limit for bodily injury, $100,000 limit for property damage, a $250 deductible for collision, and a $50 deductible for comprehensive. Which of the following adjustments would allow Jerry to meet his goal?

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.
Reduce bodily injury limits to $25/50,000.
b.
Reduce property damage to $25,000.
c.
Increase collision deductible to $500.
d.
Increase comprehensive deductible to $100.

Answer 1

Answer: c.

Current annual premium = 31.75 + 193.00 + 415.25 + 110.25 = $750.25.
Change (c) lowers collision from $415.25 to $275.75, saving $139.50/year = $11.63/month, which exceeds $10/month.