Deductibles serve three major purposes, and two of those are:
A) reduce moral hazards; save on claims handling expenses
B) reveal moral hazards; eliminate morale hazards
C) reduce morale hazards; save on claims handling expenses
D) reveal morale hazards, eliminate moral hazards

Question

Quizplus · Accepted Answer

Deductibles help reduce morale hazards, as the policyholder is responsible for a portion of the cost of a claim, and therefore has a greater incentive to avoid making frivolous claims. Deductibles also save on claims handling expenses, as the insurer only needs to process and pay out for claims that exceed the deductible amount. Deductibles do not reveal or eliminate moral hazards.

Deductibles Serve Three Major Purposes, and Two of Those Are