Topic Test

Question 3 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Which of the following statements is not something you should be thinking when considering changes in your auto insurance policy?

Answer

Higher deductibles mean lower premiums but more out-of-pocket expense in the event of an accident.

The premium you pay guarantees that you will never have to pay more than your deductible in the event of an accident.

The more types of insurance you include in your policy, the more protected you are from financial loss in the event of an accident.

Lower coverage limits mean lower premiums but more restrictions on the insurance company when covering injuries and damage resulting from an accident.

Explanation

A deductible is the amount you pay toward a covered claim, but it does not guarantee that your total costs will stop there. Costs can exceed the deductible if they are not covered or are greater than your policy’s coverage limits. So the statement that your premium guarantees you will never pay more than the deductible is not something you should assume.

AI-written and checked against the verified answer.

More from this Course

Topic Test

Investing in Stocks

Real Estate Investments