Many insurance policies carry a deductible provision that states how much of a claim a person must pay out of pocket before the insurance company pays the remaining of the expenses. For​ example, if someone files a claim for​ $350 on a policy with a​ $200 deductible, he or she pays​ $200 and the insurance company pays​ $150. In the following​ cases, determine how much a person would pay with and without an insurance policy. Complete parts​ (a) through​ (d) below.
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Part 1
a. A person has a car insurance policy with a ​$700700 deductible provision​ (per claim) for collisions. During a​ two-year period, the person files claims for ​$540540 and ​$950950. The annual premium for the policy is ​$550550.
With the insurance​ policy, the person would pay ​$enter your response here. Without the insurance​ policy, the person would pay ​$enter your response here.
​(Type whole​ numbers.)

Let's analyze the problem step by step, first for the scenario with the insurance policy and then without the insurance policy.

### **With the insurance policy:**
- The deductible is $700 per claim. The person has two claims, one for $540 and another for $950.
- **First claim:**
  - The claim is $540, which is less than the deductible. Therefore, the person will pay the entire $540 out of pocket, and the insurance company will pay $0.
- **Second claim:**
  - The claim is $950, which exceeds the $700 deductible. The person will pay the deductible of $700, and the insurance company will cover the remaining $950 - $700 = $250.

- **Total expenses with insurance:**
  - Out-of-pocket costs for both claims = $540 (first claim) + $700 (deductible for the second claim) = $1,240.
  - **Additionally**, the person also pays the annual premium of $550 for the policy.
  - **Total cost with insurance = $1,240 (out-of-pocket for claims) + $550 (annual premium)** = $1,790.

### **Without the insurance policy:**
- The person would pay the entire amount of both claims out of pocket.
  - **First claim: $540**
  - **Second claim: $950**
  - **Total without insurance = $540 + $950 = $1,490.**

### Summary:
- **With the insurance policy, the person would pay:** $1,790.
- **Without the insurance policy, the person would pay:** $1,490.

Would you like further details or clarifications?

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Here are 5 related questions to deepen understanding:
1. How would the total costs change if the deductible was higher?
2. What is the impact of having multiple small claims in a year on out-of-pocket expenses?
3. What factors should one consider when choosing an insurance deductible?
4. How would increasing the annual premium affect the total cost of the insurance policy?
5. How does a higher deductible typically affect the annual premium of an insurance policy?

**Tip:** Lower deductibles reduce out-of-pocket expenses in case of claims, but they often result in higher premiums. Balance based on your risk tolerance and financial situation.

A person has a car insurance policy with a $700 deductible provision (per claim) for collisions. During a two-year period, the person files claims for $540 and $950. The annual premium for the policy is $550. With the insurance policy, the person would pay ___. Without the insurance policy, the person would pay ___.

Learn how to calculate the total expenses for a person with a car insurance policy having a $700 deductible. This problem involves determining out-of-pocket costs for two claims ($540 and $950) and comparing the total amount paid with and without insurance, including the annual premium of $550.

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