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For similar trucks and drivers, truck insurance for collision damage

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For similar trucks and drivers, truck insurance for collision damage  [#permalink]

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New post 25 Apr 2018, 02:51
4
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A
B
C
D
E

Difficulty:

  45% (medium)

Question Stats:

67% (01:31) correct 33% (01:32) wrong based on 204 sessions

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For similar trucks and drivers, truck insurance for collision damage has always cost more in Greenville than in Atlanta. Studies, however, show that trucks owned by Greenville companies are, on average, slightly less likely to be involved in a collision than trucks in Atlanta. Clearly, therefore, insurance companies are making a greater profit on collision-damage insurance in Greenville than in Atlanta.
Which of the following is an assumption on which the argument depends?


A.The insurance companies were already aware of the difference in the likelihood of collisions before the publication of the reports.
B Drivers from Greenville who have been in a collision are more likely to report it to their insurance company than Drivers from Atlanta are.
C Repairing typical collision damage does not cost more in Greenville than in Atlanta.
D Atlanta and Greenville are the cities with the highest collision-damage insurance rates.
E There are no more trucks in Greenville than in Atlanta.

Source:Crackverbal

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Re: For similar trucks and drivers, truck insurance for collision damage  [#permalink]

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New post 13 May 2018, 08:29
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Conclusion of argument-insurance companies are making a greater profit on collision-damage insurance in Greenville than in Atlanta

For greater profit
damage cost<insurance cost

Insurance cost is higher in Greenville
So damage cost must be same in order to earn greater profit

C states exactly that

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Re: For similar trucks and drivers, truck insurance for collision damage  [#permalink]

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New post 14 May 2018, 06:56
I don't understand how C is correct. I found B more appropriate.

Pls help !!

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Re: For similar trucks and drivers, truck insurance for collision damage  [#permalink]

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New post 14 May 2018, 07:21
B makes you think and distracts you. Ask yourself, for the conclusion to stand, does B really NEED to be true? Meaning, when we say Greenville insurance companies are making more profit than the ones in Atlanta, does this argument depend on the fact that Greenville drivers are more likely to report accidents to the insurance companies? No.

If they are more likely, say 7 out of 10 will report an accident vs. Atlanta's, say, 3 out of 10. But there could be a case where Greenville had 1000000 accidents and Atlanta only had 10. In such a case, insurance companies in Atlanta would not spend much money doing damage repairs and they SHOULD be more profitable than Greenville (by this explanation), but this is not the case we're given.

C states that the cost of repairs are, on average, cheaper in Atlanta for similar trucks and drivers

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For similar trucks and drivers, truck insurance for collision damage  [#permalink]

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New post 14 May 2018, 09:19
SonalSinha803 wrote:
I don't understand how C is correct. I found B more appropriate.

Pls help !!

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The stimulus talks about something like lets say
Attachment:
INSURANCE DATA.PNG
INSURANCE DATA.PNG [ 2.99 KiB | Viewed 583 times ]

And then jumps to the conclusion

Quote:
insurance companies are making a greater profit on collision-damage insurance in Greenville than in Atlanta.


But how ????

What is the role of an Insurance company and how do they generate profit -

Profit of an Insurance Company = Premium Collection - Settlement of Claims ( Damage repair in this case)

Now think , if the repairing charges for collusion insurance is more in Greenville than in Atlanta, can they still earn greater profit on collision-damage insurance in Greenville than in Atlanta ????

Hope this helps a bit !!! :grin:

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Re: For similar trucks and drivers, truck insurance for collision damage  [#permalink]

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New post 15 May 2018, 10:45
sidvarma and Abhishek009,

Thanks for your explanations. It is pretty clear to me now.

Regards !!

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For similar trucks and drivers, truck insurance for collision damage  [#permalink]

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New post 17 May 2018, 09:16
Known information:
1.Insurance cost more in Greenville than in Atlanta.
2.Number of collisions is lesser in greenville than in atlanta

Analysis:
There is 2 way the insurance companies can make profit.
1. The number of collisions are less
2. The repair cost is less

The first option is already given in question. So we need to look for answer choice that gives info about second one.

Clearly option C states the same as our analysis.

Option C is the answer

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For similar trucks and drivers, truck insurance for collision damage &nbs [#permalink] 17 May 2018, 09:16
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