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a) Indicate whether each of the following guarantees is considered insurance. Explain your answer. i) A...

a) Indicate whether each of the following guarantees is considered insurance. Explain your answer.

i) A television set is guaranteed by the manufacturer against defects for 90 days.

ii) A large group of homeowners agrees to pay for losses to homes that burn during the year because of fire.

iii) I bet the insurance company $300 against $100,000 that my house will burn.

Solutions

Expert Solution

1. This is a sort of warranty not insurance as manufacturer is providing for repairs as an additional service not exchanged with payment of premium.

2.This is making up for the losses without payment of a premium so this is also not an insurance.

3. This is a type of fire insurance where you are paying $ 300 as a premium to get reimbursed $100000 , if your house burns.

jeff jeffy answered 2 years ago
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