Donna,who is single and 30-years-old,has received several speeding tickets recently and was shocked by the effect on her auto insurance.Donna drives a 2002 Pontiac Firebird.She is currently not covered by health insurance,has an emergency fund of $25,000,an income of $100,000 per year,and an investment portfolio of $230,000.She is trying to reduce the price of her auto insurance.Which of the following actions is most likely to be help Donna reduce the price of her auto insurance?
A) Maintain her liability limits at the current levels.
B) Raise her medical payments coverage.
C) Raise her deductible from $250 to $1,000.
D) Maintain collision-coverage at current levels.
E) Raise her collision coverage by $10,000.

Question

Quizplus · Accepted Answer

Raising the deductible from $250 to $1,000 will reduce the price of auto insurance as it increases the amount the policyholder must pay out of pocket before the insurance company begins to pay. Since Donna has an emergency fund of $25,000, she can handle a higher deductible, which will reduce her premium costs. Maintaining liability limits, medical payments coverage, and collision coverage at current levels or raising collision coverage by $10,000 will not significantly reduce the price of auto insurance.

Donna,who Is Single and 30-Years-Old,has Received Several Speeding Tickets Recently