Question

The owner of an automobile insures it against damage by purchasing an insurance policy with a...

The owner of an automobile insures it against damage by purchasing an insurance policy with a deductible of 250. In the event that the automobile is damaged, repair costs can be modeled by a uniform random variable on the interval (0, 1500). I know how to solve the problem, I would like to know why cant I use Var(Y) = Var(X) - Var(250), where Y = X - 250?

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Answer #1

Here a=1 and b= -250

Var(X-250) = (1)^2 Var(X) = Var(X)                                                                               

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