Suppose you buy a new BMW for $$30,000$ and you have it insured

for $$25,000.$ This means that in the event of an accident you have

the right to sell the car to the insurance company for a price of

$$25,000.$

$1.$ Is this insurance policy the equivalent of a call or a put option

on the vehicle?

$2.$ Let$$s says you get into an accident but the damage done to the

car is slight and the car is worth $$28,000$ after the accident.

Would you exercise the option?

$3.$ At what price range would you choose to exercise the option?