Question

A random sample of eight drivers insured with a company and having similar auto insurance policies...

  1. A random sample of eight drivers insured with a company and having similar auto insurance policies was selected. The following table lists their driving experiences (in years) and monthly auto insurance premiums.

Driving Experience (years)

Monthly Auto Insurance Premium

5

$64

2

87

12

50

9

71

15

44

6

56

25

42

16

60

Does the insurance premium depend on the driving experience or does the driving experience depend on the insurance premium? Do you expect a positive or a negative relationship between these two variables?

Homework Answers

Answer #1

The insurance premium depends on the driving experience. The premium of the car insurance depends on three factors. One of them is type and age of the vehicle. Since, the driving experience and age of the vehicle depend on each other, so insurance premium depends on the age of the vehicle too. That's why, the insurance premium depends on the driving experience.

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