Chapter P8, Problem 2RQ

To determine

The reason why driving record affect a person’s auto insurance rates.

Explanation of Solution

If a person has good driving record, then the insurance companies can easily determine that there would be a low risk of accidents which helps the driver to get insurance at lower premium with the minimum risk factor.

Whereas, the bad driving record decrease the chances to get insurance at lower premium because there are more chances of overspeed penalties, challans, and accidents.

Therefore, driving record affect a person’s auto insurance rates.

Economics Concept Introduction

Introduction: A driving record of a person provides the information how a person is expert in driving by showing the past driving record. This record helps to determine whether there is a risk if a company insured the vehicle of that person.