Deductibles Serve Three Major Purposes,and Two of Those Are

question 33

Multiple Choice

Deductibles serve three major purposes,and two of those are:

• A)reduce moral hazards; save on claims handling expenses
• B)reveal moral hazards; eliminate morale hazards
• C)reduce morale hazards; save on claims handling expenses
• D)reveal morale hazards, eliminate moral hazards
• E)reduce claims handling expenses; encourage avoidance

---

Definitions:

Privity or Near-Privity Rule

A legal principle requiring a close, direct relationship between the parties involved in a contract for a third party to have the right to sue.

Third Party Liability

Legal responsibility that arises when a third party is held liable for damages or injury caused to another, often seen in insurance contexts.

Unaudited

Referring to financial statements or accounts that have not undergone formal examination and verification by an auditor.

Financial Statement

Documents that provide an overview of a company's financial condition, including balance sheets, income statements, and cash flow statements.