If you drive a fancy car a lot of miles each month, your insurance premiums will likely be:

• A. higher, but only if the car is not considered fancy
• B. unchanged, since mileage does not affect insurance premiums
• C. higher, because both the value of the car and the risk of accidents increase
• D. lower, because frequent driving reduces the risk of accidents

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the factors that influence insurance premiums. Insurance companies typically consider both the value of the car and the risk of accidents when setting premiums.
2. Step 2: Recognize that driving a fancy car a lot increases the risk of accidents due to more exposure on the road, which tends to raise insurance costs.
3. Step 3: Note that the value of the car also matters; a fancy (high-value) car will cost more to repair or replace, which increases the insurance premium.
4. Step 4: Combine these two effects: higher risk from more miles driven and higher value of the car both contribute to higher insurance premiums.
5. Step 5: Conclude that the insurance premium will be higher because both the increased risk from frequent driving and the high value of the fancy car raise the cost for the insurer.