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

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Re: For similar trucks and drivers, truck insurance for collision damage [#permalink]
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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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 [ 2.99 KiB | Viewed 3354 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 !!!

PS : Please revert in case of any further doubt ...
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Re: For similar trucks and drivers, truck insurance for collision damage [#permalink]
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]
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.

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Re: For similar trucks and drivers, truck insurance for collision damage [#permalink]
Hello from the GMAT Club VerbalBot!

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