Scenario 4: Auto Insurance
John drives a car valued at . His auto insurance policy has two main components
Collision Coverage: Costs per of vehicle value annually.

Calculate the annual cost of collision coverage.
o Formula: Cost Value of car Cost per

Claty Coverage: A fee of per year.

Calculate the total annual cost of her auto insurance.
o Total Cost = Collision Coverage Cost + Liability Coverage

Ask by Cummings Barrett. in the United States

Jan 24,2025

Question

Scenario 4: Auto Insurance
John drives a car valued at . His auto insurance policy has two main components
Collision Coverage: Costs per of vehicle value annually.

Calculate the annual cost of collision coverage.
o Formula: Cost Value of car Cost per

Claty Coverage: A fee of per year.

Calculate the total annual cost of her auto insurance.
o Total Cost = Collision Coverage Cost + Liability Coverage

Ask by Cummings Barrett. in the United States

Jan 24,2025

UpStudy AI · Accepted Answer

Sure, let's break down the calculations step by step for John's auto insurance costs.

### 1. **Calculate the Annual Cost of Collision Coverage**

**Given:**
- **Value of the Car:** \$25,000
- **Cost per \$1,000 of Vehicle Value:** \$2.60

**Formula:**
$$
\text{Collision Coverage Cost} = \left( \frac{\text{Value of Car}}{1,000} \right) \times \text{Cost per \$1,000}
$$

**Calculation:**
$$
\begin{align*}
\text{Collision Coverage Cost} &= \left( \frac{\$25,000}{1,000} \right) \times \$2.60 \
&= 25 \times \$2.60 \
&= \$65 \text{ annually}
\end{align*}
$$

### 2. **Calculate the Total Annual Cost of Auto Insurance**

**Given:**
- **Liability Coverage Fee:** \$400 per year
- **Collision Coverage Cost:** \$65 per year (from above)

**Formula:**
$$
\text{Total Annual Cost} = \text{Collision Coverage Cost} + \text{Liability Coverage}
$$

**Calculation:**
$$
\begin{align*}
\text{Total Annual Cost} &= \$65 + \$400 \
&= \$465 \text{ annually}
\end{align*}
$$

### **Summary**

- **Annual Collision Coverage Cost:** \$65
- **Annual Liability Coverage Cost:** \$400
- **Total Annual Auto Insurance Cost:** **\$465**

John's total annual auto insurance expense for both collision and liability coverage is **\$465**.
John's annual auto insurance cost is \$465, which includes \$65 for collision coverage and \$400 for liability coverage.

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