Question

Collision and comprehensive:

a. Only pay the insurer

b. Only pay the insured

c. Are compulsory insurance

d. Have no deductibles

e. None of these

Answer 1

Collision and comprehensive insurance pay the insured, not the insurer, and they are not compulsory but may be required by lenders. These insurance options typically include deductibles, which are costs the policyholder must bear before insurance benefits are paid out.

Step-by-step explanation:

Collision and comprehensive insurance options, commonly found in auto insurance policies, are types of coverage that:

• Pay the insured for losses up to the policy limit, after any deductible is paid.
• Are not compulsory insurance in every state but may be required by lenders if you have a loan or lease.
• Typically come with deductibles, which is the amount you pay out-of-pocket before the insurance coverage kicks in.

Deductibles, copayments, and coinsurance are mechanisms within insurance policies that require the insured to share in the cost of a claim. This helps to reduce moral hazard, encouraging policyholders to act responsibly and not take unnecessary risks because costs are shared.