Some drivers are low risk and other are high risk because:
A)the probability of loss from collision is different across drivers.
B)of inherent discrimination in our society.
C)drivers lie about their risk characteristics to insurance companies.
D)insurance companies can costlessly assess drivers' risk characteristics.

Question

Quizplus · Accepted Answer

The probability of loss from collision is different across drivers based on their behavior and driving history, making some drivers more likely to be involved in accidents and therefore higher risk. This is why insurance companies assess each driver individually and price their insurance accordingly. There may be some discrimination in how certain demographics are assessed, but the primary factor is the driver's risk profile. Claims by drivers about their risk characteristics may not be accurate, but insurance companies still have ways of analyzing data to assess risk.

Some Drivers Are Low Risk and Other Are High Risk