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    Statistics: Should You Get Rental Car Insurance?

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    1. Support that the service rate to a waiting line system is 10 customers per hour (exponentially distributed). Analyze how the average waiting time is expected to change as the arrival rate varies from two to ten customers per hour (exponentially distributed).

    2. Suppose that a car rental agency offers insurance for a week that will cost $10 per day. A minor fender bender will cost $1,00, while a major accident might cost $15,000 in repairs. Without the insurance, you would be personally liable for any damages. What should you do? Clearly there are two decision alternatives: take the insurance or do not take the insurance. The uncertain consequences, or events that might occur, are that you would not be involved in an accident, that you would involved in a fender bender, or that you would be involved in a major accident. Assume that your researched insurance industry statistics and found out that the probability of a fender bender is 0.16%. What is the expected value decision? Would you choose this? Why or why not? What would be some alternate ways to evaluate risk?

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    https://brainmass.com/statistics/probability/statistics-should-you-get-rental-car-insurance-519662

    Solution Preview

    Mean Mean Average
    Service Arrival Waiting
    Rate, u Rate, ...

    $2.19