Let's carefully walk through the given information and logically deduce the correct comparison of the premium prices for the two insurance policies.
First, let's state the deductibles:
- The deductible for Policy 1 is \[tex]$2,200.
- The deductible for Policy 2 is \$[/tex]1,500.
To understand the relationship between deductibles and premiums, it's important to note that a lower deductible typically implies a higher premium. The reason is that with a lower deductible, the insurance company takes on more risk and therefore charges a higher premium to cover that risk.
Now, let's compare the deductibles:
- Policy 1 deductible = \[tex]$2,200
- Policy 2 deductible = \$[/tex]1,500
Policy 2 has a lower deductible (\[tex]$1,500) compared to Policy 1 (\$[/tex]2,200). Given the rule that a lower deductible generally results in a higher premium:
This means Policy 2, with the lower deductible, will have a higher premium.
Now we can match this understanding with the options provided:
A. Policy 1 will have a higher premium because it has a lower deductible than Policy 2.
- This is incorrect. Policy 1 actually has a higher deductible.
B. Policy 2 will have a higher premium because it has a lower deductible than Policy 1.
- This is correct. Policy 2 has a lower deductible, leading to a higher premium.
C. Policy 1 will have a higher premium because it has a higher deductible than Policy 2.
- This is incorrect. A higher deductible generally implies a lower premium.
D. Policy 1 will have a lower premium because it has a lower deductible than Policy 2.
- This is incorrect. Policy 1 has a higher deductible, which would generally mean a lower premium.
Thus, the correct statement is:
B. Policy 2 will have a higher premium because it has a lower deductible than Policy 1.
