On car insurance policies,State Ranch Insurance Company offers drivers an option: Policy 1 features a deductible of $1,000,and it requires a driver to pay an annual premium of $500.Policy 2 features a deductible of $500,and it requires a driver to pay an annual premium of $750.

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State Ranch Insurance Company is engaging in screening drivers by offering two different policies with different deductibles and premiums. By offering Policy 1 with a higher deductible and lower premium, they are likely attracting safer drivers who are less likely to make claims. On the other hand, Policy 2 with a lower deductible and higher premium may attract riskier drivers who are more likely to make claims. This is a form of screening where the insurance company is trying to attract a certain type of customer based on their risk profile.

On Car Insurance Policies,State Ranch Insurance Company Offers Drivers an Option