To determine which statement correctly compares the premium prices for the given home owner's insurance policies, let’s carefully analyze the given data on deductibles and understand the relationship between deductible amounts and premium prices.
1. Definitions:
- Deductible: The amount the policyholder must pay out of pocket before the insurance company pays a claim.
- Premium: The amount the policyholder pays to have the insurance coverage.
2. Relationship Understanding:
- Generally, a higher deductible results in a lower premium because the policyholder assumes a greater portion of the risk.
- Conversely, a lower deductible results in a higher premium because the insurance company assumes a greater portion of the risk.
3. Policy Analysis:
- Policy 1: Deductible = [tex]$1,000.00
- Policy 2: Deductible = $[/tex]1,800.00
Comparing these values:
- Policy 1 has a lower deductible ([tex]$1,000.00) compared to Policy 2 ($[/tex]1,800.00).
4. Implication:
- Since Policy 1 has a lower deductible, it will have a higher premium.
- Therefore, the correct comparison is: Policy 1 will have a higher premium because it has a lower deductible than Policy 2.
5. Conclusion:
- Among the provided statements, the statement that correctly compares the premium prices is: C. "Policy 1 will have a higher premium because it has a lower deductible than Policy 2."
Thus, the correct answer is:
C. Policy 1 will have a higher premium because it has a lower deductible than Policy 2.
