Acasa Insurance Company offers two plans for home insurance. Plan A has a $750 yearly premium with a $3,000 deductible. Plan B has a $1,200 yearly premium with a $1,000 deductible. Last year, 20% of all policyholders made damage claims. The average claim amount was $6,500.

The expected value per claim for every customer who chooses plan B is $. The expected value per claim for every customer who chooses plan A is $.

Question

Acasa Insurance Company offers two plans for home insurance. Plan A has a $750 yearly premium with a $3,000 deductible. Plan B has a $1,200 yearly premium with a $1,000 deductible. Last year, 20% of all policyholders made damage claims. The average claim amount was $6,500.

The expected value per claim for every customer who chooses plan B is $. The expected value per claim for every customer who chooses plan A is $.

kingdelvin45 · Answer

Plan A 
Cust Cost = 3000 ded + 750 premium = $3750
Acasa Cost = 6500 claim -3000 cust ded -$750 cust premium = $2750 cost to Acasa.