The annual insurance premium for a car Nicole bought 6 months ago is $756.00 with a $500 deductible for collision. Nicole had just paid the bill for her sixth month of insurance before she was involved in a car accident resulting in $2,000 in damage to her car. Because she had collision insurance in her policy, the insurance company took care of all of the repairs less the $500.00 deductible. Considering how much she paid in insurance premiums and deductibles, would you say the purchase of insurance over the last 6 months was a good investment for Nicole? Why or why not?
Combining the 6 months of insurance payments ($63.00 per month for 6 months = $378.00) with the $500 deductible, Nicole paid a total of $878.00 for the $2,000 worth of repairs to her car. This was a good investment.
