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Question: Taking a $500 on your PAP automobile insurance contract is an example of

Options:

  1.  Risk avoidance
  2.  Loss reduction
  3.  Risk assumption
  4.  Risk transfer
  5.  Hedging

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3. Risk assumption

Taking a $500 on your PAP automobile insurance contract is an example of Risk assumption.


More information:

Risk assumption is the practice of paying for minor losses yourself, but protecting against catastrophic losses by buying insurance cover.

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