ABC Auto Insurance classifies drivers as good, medium, or poor risks. Drivers wh
ID: 444380 • Letter: A
Question
ABC Auto Insurance classifies drivers as good, medium, or poor risks. Drivers who apply to them for insurance fall into these three groups in the proportions 30%, 50%, and 20%, respectively. The probability a “good” driver will have an accident is .01, the probability a “medium” risk driver will have an accident is .03, and the probability a “poor” driver will have an accident is .10. The company sells Mr. Brophy an insurance policy and he has an accident. What is the probability Mr. Brophy is:
ABC Auto Insurance classifies drivers as good, medium, or poor risks. Drivers who apply to them for insurance fall into these three groups in the proportions 30%, 50%, and 20%, respectively. The probability a “good” driver will have an accident is .01, the probability a “medium” risk driver will have an accident is .03, and the probability a “poor” driver will have an accident is .10. The company sells Mr. Brophy an insurance policy and he has an accident. What is the probability Mr. Brophy is:
Explanation / Answer
A good driver = 0.3(30/100)
A “medium” risk driver =0.5(50/100)
A poor” driver =0.2(20/100)
The other information is irrelevant unless the question asks for the probability of Good, Medium and poor driving meeting with an accident.