Question

Donna, who is single and 30 years old, received several speeding tickets recently and was shocked by the effect they had on her auto insurance. Donna drives a 2017 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 help Donna reduce the price of her auto insurance?a. lower her liability limits to the minimum allowed in her state b. drop her medical payments coverage c. raise her deductible from $250 to $1,000 d. drop her comprehensive coverage and keep collision-only e. drop everything from her policy except the liability insurance

Answer 1

Answer:

C) raise her deductible from $250 to $1,000

Explanation:

If Donna starts to drop all her coverages, then she will not only pay less, she wouldn't any insurance to cover her.

If she really needs to lower her insurance costs, the best way to do it is to raise her deductible. That way she will still be covered, but she will need to put more money in case of an accident. To be honest, generally car accidents cost thousands, and increasing the deductible from by $750 is not really that much compared to what an insurance policy covers.

The deductible is the amount of the insurance claim that must be paid by the insured, the rest is paid by the insurance company.