Find the website for your state department of motor vehicles

Assignment Help Mathematics
Reference no: EM131143405

Directions and Analysis

Task 1: Investigating Vehicle Insurance

All states except one require car insurance, but not all states require the same coverage. Each state defines the minimum insurance coverage that is required. According to the Minnesota minimum coverage requirements, for example, all licensed vehicles are required to have coverage for:

  • personal injury protection (PIP)
  • liability
  • uninsured motorist
  • underinsured motorist

a. Find the website for your state's department of motor vehicles (DMV). Investigate the minimum coverage requirements established by your state, and list these coverage requirements:

  • Injury or death to one person
  • Injury or death to more than one person
  • Damage to property

b. If you own or regularly drive a vehicle, check the insurance policy and report which required coverage's you have and what the coverage value is for each one of them. Note which coverage's are at the minimum value prescribed by the state.

If you do not own or drive a vehicle, review your state's minimum coverage requirements and describe which coverage's would you like to have if you did regularly drive a vehicle.

c. What are some variables that can affect your premium? How do these variables affect your premium? Check your state's DMV website or conduct an Internet search to get an idea of the variables that affect your premium.

d. What is your deductible amount? How does changing to a higher or lower deductible affect the premium?

e. What other variables do you have some control over?

f. Of the variables affecting your insurance, are any of them truly random variables?

g. Suppose that you head an insurance company. Your most popular insurance policy has a premium of $600 and a deductible of $1,000. This insurance policy provides your state's minimum coverage of $30,000 for injury or death to one person, $50,000 for injury or death to two or more people, and $10,000 for damage to property, which is called 30/50/10 coverage.

Assume that, on average, 2 of your 100 customers have an accident every year. One of the accidents causes damage to property and the other causes injury or death to one person. Both drivers file for the maximum claims. After paying the claims, will your company still profit from the premiums collected in a year?

h. Now assume that you are one of the customers purchasing this popular insurance policy with the company. Considering only your premiums, deductible, and claims, what is the break-even period after which you could make a $10,000 claim for property damage without the insurance company suffering a loss?

i. How would the break-even period in this scenario change if you lived in another state? Research another state's minimum coverage requirement and calculate the break-even period you calculated above for that state's minimum coverage requirements. Assume that all other variables (premium, deductible, etc.) are the same.

j. Do some research and define what "usage-based," or "pay as you go," insurance is. What variables are being measured in this form of insurance?

k. Describe and explain whether you think there should be penalties for people who do not have auto insurance. Research the topic, and cite some data to back up your opinion.

Task 2: Investigating Other Types of Insurance

Apart from vehicle insurance, there are several other types of insurance such as life insurance, homeowner's insurance, etc. The coverage's for these types of insurances are mostly the same.

a. Why do banks require home insurance?

b. If you owned your home outright, would you pay for insurance? Why or why not?

c. Should states have no pay, no play laws for health insurance? Why or why not?

d. Explain how an insurance company can pay a large benefit even if it hasn't collected that amount from an individual's premiums.

Reference no: EM131143405

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