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\begin{tabular}{|l|r|}
\hline
\multicolumn{2}{|c|}{
\begin{tabular}{c}
Home Owner's \\
Policy Comparison
\end{tabular}} \\
\hline
& \multicolumn{1}{|c|}{Deductible} \\
\hline
Policy 1 & \[tex]$2,100.00 \\
\hline
Policy 2 & \$[/tex]1,600.00 \\
\hline
\end{tabular}

Which statement below correctly compares the premium prices for these insurance policies?

A. Policy 2 will have a higher premium because it has a higher deductible than Policy 1.
B. Policy 1 will have a higher premium because it has a lower deductible than Policy 2.
C. Policy 2 will have a higher premium because it has a lower deductible than Policy 1.
D. Policy 1 will have a lower premium because it has a lower deductible than Policy 2.

Sagot :

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To determine which statement correctly compares the premium prices for the given insurance policies based on their deductibles, we should follow these steps:

1. Understand the relationship between deductible and premium:
- Typically, insurance policies with lower deductibles will have higher premiums. This means that the insurer charges more because they are taking on more risk by having to pay out more in the event of a claim.

2. Compare the deductibles of the two policies:
- Policy 1: Deductible = \[tex]$2,100.00 - Policy 2: Deductible = \$[/tex]1,600.00

Here, Policy 2 has a lower deductible (\[tex]$1,600.00) compared to Policy 1 (\$[/tex]2,100.00).

3. Determine the premium relationship:
- Since Policy 2 has a lower deductible, it will generally have a higher premium. The logic is that with a lower deductible, the insurer may have to pay more frequently for claims, so they charge more in premium to offset this risk.

4. Select the correct statement:
- Statement C says, "Policy 2 will have a higher premium because it has a lower deductible than Policy 1."

Therefore, the statement that correctly compares the premium prices for these insurance policies is:

C. Policy 2 will have a higher premium because it has a lower deductible than Policy 1.
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