Insurance Number Chugs

Auto Insurance Probability

In this Number Chug, students will:

  • Use probability to understand how insurance companies calculate risk and premiums
  • Calculate expected value and apply that to potential profits for an insurance company

Common Core Alignment:

CCSS.MATH.CONTENT.HSS.MD.A.2 Calculate the expected value of a random variable; interpret it as the mean of the probability distribution.
CCSS.MATH.CONTENT.HSS.MD.B.5 Weigh the possible outcomes of a decision by assigning probabilities to payoff values and finding expected values.