The owner of a chain of bicycle stores are uncertain whether on of their shops is covered under their commercial general liability policy. To verify coverage, they should check which of the following policy provision? Condition Declaration other insurance insuring agreement
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The owner of a chain of bicycle stores are uncertain whether on of their shops is covered under their commercial general liability policy. To verify coverage, they should check which of the following policy provision?
- Condition
- Declaration
- other insurance
- insuring agreement
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- Indicate whether the statement is true, false, or unclear, and justify your answer.Ex post risk is typically much lower than ex ante risk because uncertainty is largely eliminated by the purchase of an insurance contract.The transfer of Pure risk from one party to another best determines the idea of Proximate cause insurance insurable interest coinsuranceSuppose in a given state's new insurance marketplace, with community rating and no restrictions on who can buy at the community rate, the risk pool (distribution of expected health costs) is as follows: 30% of eligible enrollees' expected health costs = $1,000 (per year)65% of eligible enrollees' expected health costs = $2,0005% of eligible enrollees' expected health costs = $10,000 Now suppose one insurer, and one insurer only, were allowed to offer any premium it wanted to any potential buyer and to exclude those it did not want to cover? What premium would they likely charge and who would they sell to and who would they exclude? What would happen to the other insurers? Does this help you see why the ACA was written to apply to all insurers?
- Unsystematic risk is not compensated in equilibrium because it can be eliminated for free through diversification. Select one: True FalseWhich of the followig is not one of the purposes of having a deductible in insurance contract: A) Reduce incidents of adverse selection B) Reduce moral and morale hazard C) Reduce premiums paid by the insured D) Eliminate small claims that are expensive to handle and processTess and Lex earn $40,000 per year and all earnings are spent on consumption (c). Tess and Lex both have the utility function c. Both could experience an adverse event that results in earnings of $0 per year. Tess has a 1% chance of experiencing an adverse event and Lex has a 12% chance of experiencing an adverse event. Tess and Lex are both aware of their risk of an adverse event. 1. Suppose the actuarially fair premium charge is 2600, Calculate Tess’ expected utility with full insurance if she is charged the premium. Round to two decimal places. 2. What is the premium that private insurance companies will charge for full insurance? Round to two decimal places. 3.Assume the social welfare function is the sum of the Tess’ and Lex’s utility functions. Select the correct statement regarding the explanation for what has happened in the private market and the role of social insurance. a.Adverse section has lead to market failure. The government could improve social welfare by…
- Risk difference may sometimes be referred to as excess risk. True FalseRice farming is risky and generates expected income of $100. The certainty equivalent associated with rice farming will be greater than $100 for a risk averse individual and less than $100 for a risk loving individual. True or FalseNow consider a different insurance company that does not have the inclination to tailor contracts specifically to individuals. Instead, it will offer a “standard contract” with the premium r =$100 and payout q=$500 to anyone who will purchase it. a. Peter has healthy-state income IH = $500 and sick-state income IS = $0. He has probability of illness p=0.1. Is the standard contract fair and/or full for Peter? If he ends up getting sick, what will his final income be? b. Tim has IH = $500 and IS = $0, but a probability of illness p = 0.2, higher than Peter’s. Is the standard contract fair and/or full for Tim? How does purchasing the standard contract affect Tim’s expected income?c. Jay has IH =$1, 000 and IS =$0, with probability of illness p=0.2. Is the standard contract fair and/or full for Jay?d. Suppose there is a customer named Ronald for whom the standard contract is partial and actuarially unfair in the insurance company’s favor. Give a set of possible values for Ronald’s IH, IS,…
- Which of the following statements regarding risk objectives for an investor is incorrect. a) Institututional investors risk objectives must include downside risk measure(s) b) Risk measures could be absolute or relative risk measure. c)Institutional investors risk objectives must consider the willingness and the ability to take risk. d) Risk objectives can include more than a single constraints. e) Retail investors risk objectives must consider the willingness and the ability to take risk.Beta and volatility differ as risk measures in that beta measures only non‑systematic risk, while volatility measures total risk. True FalseIdentify all the possible source of risks that were bought as a result of covid’19.
