Deductibles on car insurance are solutions to the _____ problem for insurers.
A) adverse selection
B) moral hazard
C) free-rider
D) all of the above

Question

Quizplus · Accepted Answer

Deductibles on car insurance primarily address the moral hazard problem by making insured individuals bear a portion of the loss, thereby reducing their incentive to act recklessly or to exaggerate claims.

Deductibles on Car Insurance Are Solutions to the _____ Problem