An insurance company offers four different deductible levels-none, low, medium,

Question

An insurance company offers four different deductible levels-none, low, medium, and high-for its homeowner's policyholders and three different levels-low, medium, and high-for its automobile policyholders. The accompanying table gives proportions for the various categories o policyholders who have both types of insurance. For example, the proportion o individuals with both low homeowner's deductible and low auto deductible is 0.06 6% of all such individuals Auto 0.04 0.06 0.05 0.02 0.07 0.0 0.20 0.13 H0.02 0.03 0.15 0.15 Suppose an individual having both types of policles is randomly selectad. (a) what is the probability that the individual has a medium auto deductible and high homeowner's deductible? (b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible? auto deductible (c) What is the probability that the individual is in the same category for both auto and homeowner's deductibles? (d) Based on your answer in part (c), what is the probablty that the two categories are aifferenti e) hat is the probability that the individual has at least one low deductible level? Using the answer in part (e), what is the probablity that neither deductible level is low? Need Help?R Tak to Tutor

Explanation / Answer

a)

probability =0.13

b)

auto =0.17

home owner =0.17

c)

probability =0.06+0.2+0.15 =0.41

d)

probability =1-0.41 =0.59

e)

prbability =0.06+0.08+.03+0.05+0.02 =0.24

f)

probability =1-0.24 =0.76

N L M H Total L 0.04 0.06 0.05 0.02 0.17 M 0.07 0.08 0.2 0.13 0.48 H 0.02 0.03 0.15 0.15 0.35 Total 0.13 0.17 0.4 0.3 1

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