paul has a car that is 8 years old and has 126,000 miles on it. even though he couldnt get more than $2,000…

paul has a car that is 8 years old and has 126,000 miles on it. even though he couldnt get more than $2,000 if he sold it, he still pays $350 per year for collision insurance to pay him up to the value of his car if it were damaged. if paul decides to drop his collision insurance coverage, how is he handling that risk? a. reducing it b. transferring it c. avoiding it d. assuming it

paul has a car that is 8 years old and has 126,000 miles on it. even though he couldnt get more than $2,000 if he sold it, he still pays $350 per year for collision insurance to pay him up to the value of his car if it were damaged. if paul decides to drop his collision insurance coverage, how is he handling that risk? a. reducing it b. transferring it c. avoiding it d. assuming it

Answer

Brief Explanations:

When Paul drops his collision insurance, he is no longer transferring the risk of car - damage costs to the insurance company. Instead, he is taking on the potential financial burden himself, which means he is assuming the risk. Reducing risk would involve actions like driving more safely. Transferring risk is what insurance does. Avoiding risk would mean not driving the car at all.

Answer:

D. Assuming it