The higher the insurance coverage,the more the policyholder can gain from risky activities that make an insurance payoff less likely.

Question

Quizplus · Accepted Answer

Higher insurance coverage typically means the policyholder is better protected financially against losses, but it does not incentivize engaging in riskier activities that would make an insurance payoff less likely. Insurance is designed to mitigate financial loss, not to encourage risk-taking behavior.

The Higher the Insurance Coverage,the More the Policyholder Can Gain