Financial Risks Unit Test

Question

16 of 2016 of 20 Items

Question
Why does geographic location affect the cost of premiums?(1 point)
Responses

There are less car mechanics in certain areas so the cost to repair is higher.
There are less car mechanics in certain areas so the cost to repair is higher.

Because people in urban areas tend to buy flashier cars.
Because people in urban areas tend to buy flashier cars.

Because insurance companies review the statistical history of claims for an area and if there is an increased risk of claims for accidents or theft, they will raise the premium.
Because insurance companies review the statistical history of claims for an area and if there is an increased risk of claims for accidents or theft, they will raise the premium.

Because insurance companies believe that people in urban areas should use mass transit.
Because insurance companies believe that people in urban areas should use mass transit.
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Answer 1

The correct answer is: Because insurance companies review the statistical history of claims for an area and if there is an increased risk of claims for accidents or theft, they will raise the premium.