Question

Because of an accident Royce was involved in, his insurance company has increased his annual premium for auto insurance by 5.2%. His original policy was set up using the premiums listed below. What is his new annual premium after the increase for the accident?

Royce's Auto Insurance Policy
Type of Insurance Coverage
Coverage Limits
Annual Premiums
Bodily Injury
$25/$50,000
$22.50
Property Damage
$50,000
$144.75
Collision
$500 deductible
$275.75
Comprehensive
$100 deductible
$100.00
a.
$514.76
b.
$543.00
c.
$548.20
d.
$571.24

Answer 1

First add the premiums: 22.50 + 144.75 + 275.75 + 100.00 = 543.00.

Increase by 5.2%: 543 × 1.052 = 571.236 → $571.24.

Answer: d. $571.24