An insurance company offers four different deductible levels-none, low, medium, and high-for its homeowner's policyholders and three different levels-low, medium, and high-for its automobile policyholders. The accompanying table gives proportions for the various categories of policyholders who have both types of insurance. For example, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.05 (5% of all such individuals).

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An insurance company offers four different deductible levels-none, low, medium, and high-for its homeowner's policyholders and three different levels-low, medium, and high-for its automobile
policyholders. The accompanying table gives proportions for the various categories of policyholders who have both types of insurance. For example, the proportion of individuals with both low homeowner's
deductible and low auto deductible is 0.05 (5% of all such individuals).
Homeowner's
Auto
N
M
H
L
0.04 0.05 0.05 0.02
L
M
0.07 0.11 0.20 0.11
H
0.02 0.03 0.15 0.15
Suppose an individual having both types of policies is randomly selected.
(a) What is the probability that the individual has a medium auto deductible and a high homeowner's deductible?
(b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible?
auto deductible
homeowner's deductible
(c) What is the probability that the individual is in the same category for both auto and homeowner's deductibles?
Transcribed Image Text:An insurance company offers four different deductible levels-none, low, medium, and high-for its homeowner's policyholders and three different levels-low, medium, and high-for its automobile policyholders. The accompanying table gives proportions for the various categories of policyholders who have both types of insurance. For example, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.05 (5% of all such individuals). Homeowner's Auto N M H L 0.04 0.05 0.05 0.02 L M 0.07 0.11 0.20 0.11 H 0.02 0.03 0.15 0.15 Suppose an individual having both types of policies is randomly selected. (a) What is the probability that the individual has a medium auto deductible and a high homeowner's deductible? (b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible? auto deductible homeowner's deductible (c) What is the probability that the individual is in the same category for both auto and homeowner's deductibles?
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