Which factor would most likely increase the risk of being underinsured?A.Having a low limit of liabilityB.Purchasing the maximum coverageC.Reducing the number of policy exclusionsD.Having a history of making claims in the pastSUBMITarrow_backPREVIOUS

People would most likely be able to justify the added cost of liability insurance in which situation?A.They own a business that could be the target of lawsuits.B.They have health problems and are often forced to miss work.C.They have a law degree and can defend themselves in court.D.They live in an area that often experiences hurricanes.SUBMITarrow_backPREVIOUS

Which type of insurance policy covers liability that exceeds the coverage of a regular insurance policy?A.Umbrella insuranceB.Disability insuranceC.Health insuranceD.Life insurance

Which of the following concepts is MOST consistent with a situation in which an individual takes out insurance for their home and contents, and then fails to take adequate security precautions (such as locking their door when they leave the premises) because they know they are insured for any losses:Question 3AnswerAdverse selectionAsymmetric informationRisk managementMoral hazard

Which of the following statements is NOT correct?A.An excess is a part of the claim that the insured will need to pay out of pocket in the case of an adverse event.B.A claim is a case where the insured will not be covered by the insurance policy if an adverse event occurs because the insured had misrepresented its actual circumstances.C.The premiums for an insurance reflect the risk of the group in which the insured belongs and to some extent the personal circumstances of the individual, such as their record of past behaviour.D.A premium is a regular payment made by the insured to the insurance company to be covered in case of an adverse event described in the insurance policy.E.A benefit is a payment made by the insurance company to the insured when an adverse event occurs.

Which of these best describes risk pooling?1 pointSick people are more likely to sign up for health insurance, and healthy people will not purchase the policy because this will make the premium more expensiveIf individual events are independent, risk can be decreased by averaging across all of the eventsIf individual events are not independent, risk can be decreased by averaging across all of the eventsInsurance companies must avoid situations whereby customers are incentivized to intentionally cause an incident (e.g. burning their house down)