An auto insurance company classifies its policyholders as low, average, or high

Question

An auto insurance company classifies its policyholders as low, average, or high risks: 30% are deemed low risks, 50% are deemed average risks, and 20% are deemed high risks. Historical data suggested that 5% of low risks, 10% of average risks, and 40% of high risks will be involved in an accident in the coming year. (a) What is the probability that a randomly selected customer files an accident claim in the coming year? (b) An accident claim has just been filed with the company. What is the probability that this customer was classified as a low risk? An average risk? A high risk?

Explanation / Answer

An auto insurance company classifies its policyholders as low, average, or high

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.