Question

In: Operations Management

1. High insurance deductible usually means: A lower premiums B Higher premiums C No difference in...

1. High insurance deductible usually means:

A lower premiums
B Higher premiums
C No difference in premium
D you are willing to take on more risk

2. Worker's comp will still pay a claim if the worker was intoxicated at the time of the accident.

A True
B False

3. On a depreciating asset most likely the insurance premium would be higher for

A A replacement cost policy
B A value based policy
C This make no difference
D High deductible policy

Solutions

Expert Solution

1. The answer is Option A : Lower Premiums

Higher Deductible means the insurer is responsible for a greater amount of his initial health care costs which saves money for the insurance company. This translates into lower premiums.

2. The answer is Option B : False

If the worker was intoxicated at the time of the accident, then he has violated the rules and is at fault and cannot claim for the compensation. The employer has all the right to deny and turn down the claims.

3. The correct answer is Option A : A replacement cost policy

For a replacement cost policy, the compensation is for replacement of the asset irrespective of for how many years it has been used. Due to this, the insurance premium is higher.


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