I am reading the following problem on expected value:
A car insurance company has determined the probabilities for various claims for drivers ages $16$ through $21$ as follows:
a) Calculate the expected value and describe what it means in practical terms.
b) How much should the company charge as an average premium so that it does not lose or gain money on its claim costs?
The expected value is calculated to $\$1100$ which is just a direct application of the definition of the expected value.
Now does this mean that the insurance company should expect to pay on average $\$1100$ per claim? Or that it should expect to pay in average $\$1100$ per car insured i.e. to everyone insured in the age group of $16$-$21$?
I think that it should be that everyone in the age group of $16$-$21$ is charged $\$1100$, right?