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

Question

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

Answer 1

3. Risk assumption

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

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More information:

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