Which of the following is an example of a non-price provision in an automobile insurance contract that can reduce moral hazard?
A)A provision specifying that coverage is limited to 75 percent of the total damages caused by an accident.
B)A provision that disallows medical claims by drunk drivers involved in accidents.
C)A provision that restricts accident compensation to claims over $1,000.
D)A provision requiring that the insured car carry certain safety devices like air bags.

Question

Quizplus · Accepted Answer

Non-price provisions are terms in a contract that do not directly involve the cost or price of the insurance. Option B reduces moral hazard by discouraging risky behavior (drunk driving) without altering the price of the insurance.

Which of the Following Is an Example of a Non-Price