AINS 21 Chapter 1 Latest Update Graded A+

AINS 21 Chapter 1 Latest Update Graded A+ As a single mother on a very tight budget, Ciara is tempted to skimp on her insurance. However, her friend Mehmet tells her not to skimp on insurance, because it will help manage her cash flows. Which one of the following examples best illustrates Mehmet's point? Select one: A. When her car's transmission goes out a month after the warranty expires, Ciara is faced with a $1,100 repair bill. B. Ciara needs her car to get to her job, and she needs her job to make car payments and pay for her car insuran ce. C. Ciara finds it difficult to come up with a $787 auto insurance premium every six months. D. When her car's windshield breaks, Ciara has to pay only $100 of the $600 cost of replacing it. ✔✔D. Since the windshield loss is covered, the financial eff ect on Ciara's cash flow is reduced to the amount of her deductible Which one of the following statements is correct regarding the benefits of insurance? Select one: A. Insurers generally do not provide incentives to organizations to implement risk c ontrol measures. B. Contractors must usually provide evidence of liability insurance before a construction contract is granted. C. One disadvantage of insurance is that it promotes inefficient use of policyholders' funds. D. Insurance policies typically cannot be used to provide evidence of financial resources. ✔✔B. Contractors must usually provide evidence of liability insurance before a construction contract is granted Pravalt Construction Company pays less than its competitors for workers compensation insurance because Pravalt has had substantially fewer employee injuries than other firms in its class. This illustrates which one of the following benefits of insurance? Select one: A. Meet legal requirements B. Enable efficient use of resources C. Promote risk control D. Reduce social burden ✔✔C. Premium savings as a result of substantially fewer employee injuries provide an incentive for an insured to control loss es. Which one of the following describes the characteristics of a mutual insurance company? Select one: A. A corporation owned by stockholders that earns profits for the stockholders. B. An unincorporated association that earns profits for its indivi dual investors. C. An unincorporated association that provides reciprocal coverage to subscribers. D. A corporation owned by policyholders that provides insurance to its policyholders ✔✔D. Though premiums are an obvious cost of insurance, many insureds believe they are too high because