Question

An increase in deductibles for insurance claims translates to which change in an insurance policy when all other factors are held constant?

Answer 1

Answer: B. Lower premiums

Answer 2

greater coverage

Step-by-step explanation:

The deductible is a cash value that the insured must use to trigger the receipt of insurance. Thus, it is only worth triggering the insurance when the damage is greater than the value of the deductible. For example, suppose a car crash where the insurance deductible is $ 300. If the value of the car repair is higher than this value, it will be worth triggering the insurance. Otherwise, the insured himself is better off to bear the costs.

There is a degree of proportionality between the deductible and insurance amounts. This degree is calculated according to the risks that involve the occurrence of the event. Thus, the higher the amount to be insured, the greater the risk of the insurer and consequently the higher the value of the deductible. Therefore, if the deductibles tend to increase when the insured value increases.