An example of adverse selection is
A)asking a private pilot about the safety of his plane.
B)asking a doctor if you are sick.
C)purchasing more dental insurance when you know your teeth are especially bad.
D)asking your lawyer if you should sue your doctor for malpractice.
E)purchasing the required homeowner's insurance when you buy a condo.

Question

Quizplus · Accepted Answer

Adverse selection occurs when individuals with higher risks or costly conditions are more likely to purchase insurance. Choosing to purchase additional dental insurance when you know your teeth are especially bad is an example of adverse selection. Individuals who know they have poor dental health are more likely to purchase additional coverage, which may lead to higher costs for the insurance provider.

An Example of Adverse Selection Is