Which of the following would result in paying the lowest insurance premiums?(1 point) Responses high likelihood of loss, a low deductible high likelihood of loss, a low deductible low likelihood of loss, no deductibles low likelihood of loss, no deductibles high likelihood of loss, no deductibles high likelihood of loss, no deductibles low likelihood of loss, a large deductible
To determine which option would result in paying the lowest insurance premiums, we need to consider the factors that insurance companies take into account when determining premiums.
1. Likelihood of loss: Insurance premiums are influenced by the likelihood of a policyholder making a claim. The higher the likelihood of loss, the higher the premiums tend to be.
2. Deductible: A deductible is the amount a policyholder must pay out of pocket before the insurance coverage kicks in. A low deductible means that the insurance company pays more towards a claim, resulting in higher premiums. On the other hand, a high deductible means the policyholder pays more out of pocket, which tends to lower the premiums.
Based on these factors, the option that would result in paying the lowest insurance premiums is:
- Low likelihood of loss + a large deductible
Having a low likelihood of loss reduces the risk for the insurance company, and having a large deductible means that the policyholder would be responsible for a significant portion of the claim before insurance coverage kicks in. These two factors together generally lead to lower insurance premiums.
So, in the given options, "low likelihood of loss, a large deductible" would result in paying the lowest insurance premiums.
low likelihood of loss, no deductibles
The option that would result in paying the lowest insurance premiums is:
- Low likelihood of loss, no deductibles