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QUESTION 4 Deductibles serve three major purposes, and two of those are: a reduce moral hazards; save on claims handling expe
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Ans. 1st option.

Reduce moral hazards; save on claims handling expenses.

Deductibles are implemented to mitigate the risk (includes moral hazards). Thus this saves the cost of claims too. The insurance company will not be responsible for entire loss in this case. The insured will be responsible for a part of the loss.

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