Let's carefully analyze the problem involving these two insurance policies:
- Policy 1 has a deductible of \[tex]$2,100.00.
- Policy 2 has a deductible of \$[/tex]1,800.00.
Insurance policies typically adhere to this principle:
- Lower Deductible means Higher Premium: This is because with a lower deductible, the insurance company is taking on more risk and would require a higher premium to compensate.
- Higher Deductible means Lower Premium: This is because with a higher deductible, the policyholder is taking on more risk and therefore the insurance company requires a lower premium.
Given this information, let's compare the two policies:
1. Policy 1 with a \[tex]$2,100.00 deductible,
2. Policy 2 with a \$[/tex]1,800.00 deductible.
Since Policy 2 has a lower deductible of \[tex]$1,800.00 compared to Policy 1's deductible of \$[/tex]2,100.00, Policy 2 will inherently have a higher premium due to taking on less risk.
Thus, the correct statement is:
"Policy 2 will have a higher premium because it has a lower deductible than Policy 1."
So, the correct comparison is:
Policy 2 will have a higher premium because it has a lower deductible than Policy 1.
