average car insurance deductible
Question of probability. How to solve this problem below?
The owner of a car must decide whether to take a policy of $ 100 collision deductible, plus the required liability insurance policy. Records show that each year in your area, 8% of drivers have an accident that is their fault or who is not assigned any blame, and that the average cost of repairing this type of accident is $ 1000. If the $ 100 deductible policy collision costs $ 100 per year, would save money in the long run by buying additional insurance or just take a chance? You save $ 3 per year to a opportunity. You'll save $ 28 per year, an opportunity. Save $ 100 a year, to an opportunity. If you live anywhere near Iowa, it is better that such insurance. None of the above.
If you do not buy the policy, the expected value of the cost of repairs is $ 80 per year. With a policy deductible of $ 100, the expected value of the cost of repairs is $ 8, and the policy will cost $ 100. Thus one can expect costs to $ 28 dollars less each year, if you go without the policy.
