Question

In: Finance

From a policyholder perspective, the use of deductibles in insurance contracts is Risk avoidance. b. Risk...

From a policyholder perspective, the use of deductibles in insurance contracts is

Risk avoidance.

b.

Risk retention.

c.

Risk control.

d.

Risk transfer.

Solutions

Expert Solution

Answer:b.Risk retention

From a policyholder perspective, the use of deductibles in insurance contracts is risk retention.From an insurance context risk retention refers to the fact that the insured will bear some of the losses, a deductible is an example of this.

Other options explained

a.Risk avoidance

False.Risk avoidance refers to the management of risk by attempting to eliminate it fully rather than lower it.

C.Risk Control

False.Risk control refers to the steps put in place to lower or eliminate the risks that have been identified.

d.Risk Transfer

False.Risk transfer refers to the transfer of risk to another party by a contractual agreement.


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