
damage. As a result, many collision insurance policies have a “deductible”;
accidental amounts less than or equal to the deductible amount are not paid,
and the insurance company reduces the claims payment by the amount of the
deductible for claims that exceed the deductible. This means that small claims,
which are likely to be more frequent, will not be paid. This is in line with the
fundamental principles of insurance. The small, frequent claims are not
insured against. Presumably, the insured makes these payments out of regular
income. 䊏
E
XAMPLE 18.10. Life insurance at an advanced age. When people age, the
chance of dying in the next year increases. ...