Which of the following statements is true about exclusions?
A)Losses caused intentionally by the insured are not excluded.
B)Wear and tear is included in insurance coverage.
C)Exclusions encourage adverse selection and moral hazard.
D)Losses that are not accidental make prediction difficult.
E)Naturally occurring losses that are expected are not excluded in insurance coverages.

Question

Quizplus · Accepted Answer

Exclusions in insurance policies are designed to prevent coverage for predictable or avoidable losses, making losses that are not accidental (such as wear and tear or intentional damage) typically excluded because they are predictable and thus make risk assessment and premium setting more challenging.

Which of the Following Statements Is True About Exclusions