Insurance companies attempt to minimize moral hazard by imposing:

Question

Quizplus · Accepted Answer

Deductibles are a way for insurance companies to minimize moral hazard because they require the insured party to pay a certain amount out of pocket before the insurance coverage kicks in. This reduces the likelihood of the insured taking unnecessary risks and making claims for minor losses, as they will have to bear some of the financial burden themselves. Premiums and capital at risk are not directly related to minimizing moral hazard, and adverse selection is a separate issue related to the selection of higher risk individuals by insurance companies.

Insurance Companies Attempt to Minimize Moral Hazard by Imposing