Adverse selection is when someone with home insurance decides to take the chance that a dying
tree would fall on the garage, rather than spend the money to have the tree cut down.

Question

Quizplus · Accepted Answer

Adverse selection refers to a situation where sellers have information that buyers do not, or vice versa, about some aspect of product quality. In the insurance context, it typically describes a scenario where individuals who are more likely to make a claim are also more likely to buy insurance, not the decision-making process of insured individuals regarding maintenance or risk management.

Adverse Selection Is When Someone with Home Insurance Decides to Take