Auto insurance options offered by AA Auto Insurance are outlined in the table below. What monthly payment would you expect for an insurance policy through AA Auto Insurance with the following options?

Question

Bodily Injury: $25/50,000
Property Damage: $25,000
Collision: $250 deductible
Comprehensive: $100 deductible

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.
$43.23
b.
$46.10
c.
$54.85
d.
$64.44

Answer 1

To calculate the monthly payment for the given insurance policy options with AA Auto Insurance, we need to find the annual premiums for each type of coverage according to the provided table.

1. Bodily Injury: $25/$50,000 - Annual premium is $22.50.
2. Property Damage: $25,000 - Annual premium is $120.50.
3. Collision: $250 deductible - Annual premium is $415.25.
4. Comprehensive: $100 deductible - Annual premium is $100.00.

Next, we will sum these annual premiums to find the total annual premium:

\[ \text{Total Annual Premium} = 22.50 + 120.50 + 415.25 + 100.00 = 658.25 \]

Now, we convert the total annual premium into a monthly payment by dividing by 12:

\[ \text{Monthly Payment} = \frac{658.25}{12} \approx 54.85 \]

Thus, the expected monthly payment for the insurance policy through AA Auto Insurance is approximately $54.85.

The correct answer is: c. $54.85