By Requiring That Policyholders Pay a Deductible on a Claim

question 183

Multiple Choice

By requiring that policyholders pay a deductible on a claim, insurers guard against

• A)symmetrical information
• B)adverse selection
• C)natural selection
• D)moral hazard
• E)the winner's curse

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Definitions:

Frustrated

A feeling of discontent or annoyance arising from being blocked in achieving a goal or fulfilling a desire.

Renegotiate

The process of revising the terms of an agreement or contract in order to accommodate changing conditions or mutual interests.

Alternatives

Other options or choices available when making a decision or solving a problem.

Discouraged

Feeling less motivated or hopeful about something due to perceived obstacles or criticism.