Lesson 4

Explore

In Discover you saw that insurance companies can use probability to help determine how much money to charge for insurance. In fact, insurance companies rely heavily on probability. A different example of this can be seen in vehicle insurance. Data has shown that the probability is greater that a teenage driver will be in a vehicular accident than for an adult driver over the age of 25. As a result, an insurance company will have higher insurance premiums for teenage drivers because it is “more likely” that the teenage driver will get into an accident, resulting in the insurance company having to pay out.

Another common use of probability is in the manufacturing industry. Both the manufacturer and the consumer can use this information to help make decisions. The next Try This activity explores some smartphone probabilities.