Once drivers are labelled as high risk, it takes several years of safe driving to prove they have improved their driving habits, and as a result will pay very expensive insurance premiums.
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- One problem facing insurers is that there is a risk that a person will act differently if he/she does not bear all of the consequences of his/her actions. For instance, people with auto insurance policies may drive less carefully than they would drive if they were going to have to pay the full amount of any damages they caused/created. This problem is known as: A. Adverse selection B. Consumer deception C. Moral hazard D. Insurance fraudWhy do you think a speeding ticket or DUI would increase your insurance rate?If Jack damages his car by skidding on ice and colliding with a fence, his property damage liability would cover the damage to his car. True False Your insurance policy carries a $200 deductible for collision and $500 deductible for comprehensive. If you cause an accident which results in the following repairs and losses to your car and possessions, what will be the reimbursement from the insurance company under your collision and comprehensive coverage? • Replacement of trailer hitch $500 • Replacement of rear bumper $700 • Replacement of computer (in trunk) $400 • Replacement of rear windshield $400 $1500 $1800 $1400 Onothing
- What is the BEST option to reduce your insurance costs if you were recently in an accident? Drive safely so you don't have any accidents. Take a safe driving class. Buy a newer car. Drive without insurance.Question: Which is not a factor that will usually affect your auto insurance premium? O How much you drive O Your risk characteristics O Where you work O What vehicle you drive Im stuck between risk characteristics and where you work...A life insurance company worries that people with low risk of dying will not buy insurance because the premium is too high relative to their risk. What problem does this refer to? adverse selection moral hazard O free rider O negative externality
- Uninsured motorists face the burden of paying for accidents themselves if involved in an accident. They also impose costs on others if they are unable to bear the cost of the damages to third parties. In this case, a.the government could not improve upon this outcome. b.the government could improve the market outcome by requiring everyone carry auto insurance. c.the government could improve this outcome by requiring insurance d.companies to lower premiums for all drivers.Suppose health-care reform Y makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease and sets a fine for those people who do not buy insurance. It follows that if the fine is a. larger than the benefits derived from not buying insurance right away, then people will not buy the insurance and pay the fine. b. smaller than the benefits derived from not buying the insurance right away, then people will not buy the insurance and pay the fine. c. There is not enough information provided to answer this question. d. larger than the benefits derived from not buying insurance right away, then people will buy the insurance right away and not pay the fine.Answer this question for me mate. Much appreciated. :)
- Moral hazard occurs when someone increases their exposure to risk when insured, especially when a person takes more risks because someone else bears the cost of those risks and usually occurs before asymmetric information Select one: True FalseYour insured's automobile is badly damaged in an accident. He/she calls to advise that the insurer wants to write-off the car because the estimated repair cost is greater than its "Red Book" actual cash value. Your insured feels that this is unfair and wants the vehicle to be repaired. What should you tell your insured? Losses are rarely settled according to the "Red Book" value, so you'll negotiate with the insurer for the vehicle to be repaired. Your insured is entitled to obtain an appraisal, for which the costs must be shared equally with the insurer. The insurer must comply with the wishes of your insured so legal action should be taken. You will try to have the insurer waive the deductible to help compensate for the claim being treated as a total loss.Which of the following wouldn’t save you money on your auto insurance premium? *a. Decrease your deductibleb. Reduce or eliminate optional insurance on an older vehiclec. Bundle your insurance with other policiesd. Maintain a good credit history
