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eliminates small claims that are expensive to handle and process |
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because a deductible eliminate small claims, the insurer's loss-adjustment expenses |
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are used to reduce premiums paid by the insured |
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because deductibles eliminate small claims, premiums can be substantially |
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is not an appropriate technique for paying small losses that can be better budgeted out of personal or business income |
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should be used to cover large, catastrophic events, such as medical expenses of $500,000 or more from an extended terminal illness |
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insurance that protects against what type of loss can be purchased more economically? |
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the concept of using insurance premiums to pay for large losses rather than for small losses |
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objective is to cover large losses that can financially ruin an individual and exclude small losses that can be budgeted out of a person's income |
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other factors being equal, what type of deductible is preferable? |
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a large one is preferable to small one |
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are used by insurers to reduce both moral hazard and attitudinal hazard |
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encourage people to be more careful with respect to the protection of their property and prevention of a loss b/c the insured must bear a part of the loss |
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