If you have private information that you are a riskier driver than your record indicates,you are likely to buy an insurance policy that has a ________ deductible and a ________ premium.
A) high; high
B) high; low
C) low; high
D) low; low
E) None of the above answers is correct because private information has no effect in the market for auto insurance.

Question

Quizplus · Accepted Answer

If you know you are a riskier driver than your record indicates, you are more likely to get into an accident. Therefore, you would prefer a policy with a low deductible so you pay less out-of-pocket when you file a claim. However, policies with low deductibles typically have higher premiums because the insurance company is taking on more of the financial risk.

If You Have Private Information That You Are a Riskier