Deductibles serve three major purposes,and two of those are:
A)reduce moral hazards; save on claims handling expenses
B)reveal moral hazards; eliminate morale hazards
C)reduce morale hazards; save on claims handling expenses
D)reveal morale hazards, eliminate moral hazards
E)reduce claims handling expenses; encourage avoidance

Question

Quizplus · Accepted Answer

Deductibles help to reduce moral hazards, meaning that policyholders are less likely to engage in risky behavior or make unnecessary claims knowing that they will have to pay a portion of the expenses themselves. This helps insurers save on claims handling expenses as they do not have to process as many claims.

Deductibles Serve Three Major Purposes,and Two of Those Are