Question

Because of an accident Royce was involved in, his insurance company has increased his annual premium for auto insurance

by 5.2%. His original policy was set up using the premiums listed below. What is his new annual premium after the increase
for the accident?
Royce's Auto Insurance Policy
Type of Insurance Coverage Coverage Limits
Bodily Injury
$25/$50,000
Property Damage
$50,000
Collision
$500 deductible
Comprehensive
$100 deductible
a. $514.76
b $543.00
C. $548.20
d. $571.24
Annual Premiums
$22.50
$144.75
$275.75
$100.00

Answer 1

New Premium = $571.24

Explanation:

Current premium = $22.50 + $144.75 + $275.75 + $100.00 = $543.00

New Premium = Current Premium x (1 + 0.052)

New Premium = $543.00 x 1.052

New Premium = $571.24