An Automobile Insurance Agency Offers Two Policy Options - One

Multiple Choice

An automobile insurance agency offers two policy options - one with a deductible of $400 and a premium of $1,900 and another with a deductible of $900 and a premium of $1,500. What is the auto insurer trying to achieve by offering these two options?

A) Charging a high deductible to low-cost customers will reduce their incentive to buy insurance.
B) Charging a high deductible to high-cost customers will induce them to buy insurance.
C) Low-cost customers will buy the $1,900 one, and high-cost customers will buy the $1,500 one.
D) Low-cost customers will buy the $1,500 one, and high-cost customers will buy the $1,900 one.