Notes

Define overhead in one sentence.: Overhead is the money an insurance company spends on things like administration rather than paying out claims.
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Felicity's health insurance policy has an annual coverage limit of $1 million. Describe what the previous sentence means in one or two sentences. : Felicity's health insurance will pay for a maximum of $1 million in costs each year. Anything more is not paid by the insurance.
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Why might a policy that is underwritten cost more than one that is not?: Underwriting adds overhead expenses because two insurance companies are involved with the policy.
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Why is it normally a bad idea to insure appliances like a refrigerator? : Refrigerators can be replaced fairly easily and the cost of insurance premiums will soon be greater than the cost of replacement.
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Bo is being sued for an accident that happened in his store. Why might his liability insurance company have its lawyers fight his case? : If Bo loses, the insurance company will have to pay the damages. Using its own lawyers who have more experience, the insurance company is more likely to win than Bo and less likely to pay out.
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John's landlord requires him to buy renters insurance even though John does not want this. Why might his landlord require such insurance? : John's landlord wants to be sure that any property damage is paid for even if John cannot pay for it.
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Type of Insurance Affectedl Effect on Premium Cost:
taking a defensive-driving course car l decrease
getting older before buying a policy life l increase
installing sprinklers homeowners/renters l decrease
increasing co-pays on brand-name drugs health l decrease
buying an expensive car car l increase
installing a fireplace homeowners l increase
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