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Homework answers / question archive / You currently have your homeowner's and auto insurance with the same company
You currently have your homeowner's and auto insurance with the same company. Since both your home and auto are with the same company you get a 5% "bundling" discount equal to $500. You receive an offer from a discount auto insurance company that can lower your auto insurance by $300 per year. However, you will lose the bundling discount. What is the incremental value of switching to the discount auto company? O Negative $200 O Positive $300 O Negative $300 Positive $200
Value of switching = Savings – Discount lost
= 300-500
= -$200
Hence, the answer is Negative $200
Note: Current discount is relevant as it will not be received if the switch is made
