Acasa Insurance Company offers two plans for home insurance. Plan A has a $750 yearly premium with a $3,000 deductible. Plan B has a $1,200 yearly premium with a $1,000 deductible. Last year, 20% of all policyholders made damage claims. The average claim amount was $6,500.The expected value per claim for every customer who chooses plan B is $___The expected value per claim for every customer who chooses plan A is $___

Question
Answer:
Plan A 
 Cust Cost = 3000 deductible + 750 yearly premium = $3750
 Acasa Cost = 6500 claim -3000 cust deductible -$750 cust yearly premium = $2750 cost to Acasa.
 Plan B 
 Cust Cost = 1000 deductible + 1200 yearly premium = $2200
 Acasa Cost = 6500 claim - 1000 cust deductible - 1200 cust yearly premium = $4300 cost to Acasa.
 answer
 The expected value per claim for every customer who chooses plan B is  $4300
 The expected value per claim for every customer who chooses plan A is $2750
solved
general 9 months ago 5608