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In order to lower his monthly auto insurance bill, Henry has decided to change his existing policy by increasing the deductible for both collision and comprehensive insurance to the highest amount permitted by his insurance company, AA Auto Insurance. His current monthly auto insurance bill, which includes a \$250.00 deductible for collision and a \$50.00 deductible for comprehensive, is \$43.79. How will Henry's monthly auto insurance bill be affected by the change?



\begin{table}

\captionsetup{labelformat=empty}

\caption{AA Auto Insurance}


Type of Insurance Coverage		Coverage LimitsAnnual Premiums

Bodily Injury		\$25/\$50,000\$22.50

\$50/\$100,000\$31.75

\$100/\$300,000\$40.25

Property Damage		\$25,000\$120.50

\$50,000\$144.75

\$100,000\$193.00

Collision		\$100 deductible\$520.00




\end{table}

Verified Answer :

  • Henry's goal is to decrease his premium by increasing his collision and comprehensive deductibles.
  • The provided insurance table only lists premiums for specific levels of bodily injury, property damage, and a \(\$100\) collision deductible.
  • Data for comprehensive insurance premiums and the relationship between higher deductibles and premium costs is entirely missing.
  • Consequently, it is impossible to determine the effect on Henry's monthly bill with the provided information, and the answer is \(\boxed{\text{insufficient information}}\).

Explanation

  1. Problem Analysis

To determine how changing the collision and comprehensive deductibles affects Henry's monthly auto insurance bill, we must first examine the information provided. Henry currently pays \(\$43.79\) per month, with a \(\$250.00\) collision deductible and a \(\$50.00\) comprehensive deductible. He wishes to increase these to the highest permitted amount to reduce his premium.

  1. Review of Provided Data

We are provided with a table labeled 'AA Auto Insurance' that lists annual premiums for several types of coverage:

  • Bodily Injury: Three different coverage limits are provided (\(\$22.50\), \(\$31.75\), \(\$40.25\)).
  • Property Damage: Three different coverage limits are provided (\(\$120.50\), \(\$144.75\), \(\$193.00\)).
  • Collision: Only one option is listed, which is a \(\$100\) deductible with an annual premium of \(\$520.00\).

Importantly, the table lacks information on comprehensive insurance premiums, and it does not show how premiums change as collision deductibles increase beyond \(\$100\).

  1. Conclusion on Data Sufficiency

Because the provided table does not contain the premium costs associated with higher deductibles for collision insurance, nor does it list any data for comprehensive insurance premiums, it is impossible to calculate the financial impact of Henry's decision to increase his deductibles. Without information regarding how the premium adjusts with these specific deductible changes, the effect on Henry's monthly bill cannot be determined from the given data.

Examples

In real-world financial planning, it is essential to have complete datasets before making decisions. For example, if you are comparing two different health insurance plans with varying deductibles and co-pays, you need a full schedule of benefits for both. Just like in Henry's case, if a document only lists the premiums for one type of coverage without explaining how changes in deductibles affect that cost, you cannot accurately project your future savings or expenses. Maintaining comprehensive and accurate records is fundamental for effective budgeting and risk management.

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