Chapter 19.III, Problem 12RE

BUSINESS DECISION: INSURING THE FLEET

The Flamingo Cab Company of Cougar Creek is interested in purchasing $250 deductible collision insurance and full-coverage comprehensive insurance to cover its fleet of 10 taxicabs. As a requirement for the job. all drivers already carry their own liability coverage in the amount of 100/300/100. Cougar Creek is rated as territory 2. Five of the cabs are 4-year-old Checker Towncars. model class Y. Three of them are 2-year-old Chrysler station wagons, model class R. The remaining two are new Buick sedans, model class C. Because the vehicles are on the road almost 24 hours a day. they are considered to be very high risk and carry a rating factor of 5.2. They are, however, subject to an $18\%$ multi-vehicle fleet discount.

a. As the insurance agent for Flamingo Cabs, calculate the total annual premium for the fleet.

b. When the owner saw your rate quote, he exclaimed. ‘Too expensive! How can I save some money on this insurance?" At that point, you suggested changing the coverage to $500 deductible collision and $ 100 deductible comprehensive. How much can you save Flamingo by using the new coverage?