Question

Alice is trying to save money, so she decides she’ll only buy renters insurance if and when something bad happens at her apartment. Why won’t her strategy work?


Renters insurance only provides coverage for dorms, not apartments.


Insurance companies will only cover damages to her apartment if she pays triple the premium for the first month.


Alice will only be able to recover costs of furniture if she buys renters insurance after something bad happens at her apartment.


Insurance companies will only cover losses suffered while the policy is already in place.

Answer 1

Answer:

The correct answer is letter "D": Insurance companies will only cover losses suffered while the policy is already in place.

Explanation:

Regardless of the type of insurance you purchase, the purpose of the coverage is having a policy in case an unexpected unfortunate event takes place. Insurances do not enroll individuals who need the policy just because of an ongoing accident. Those individuals could enroll in an insurance plan but the ongoing accident will not be covered by the company. Only those events happening when the policy is already valid are subject to evaluation for coverage.

Answer 2

As Alice saves the money as she can decide and she only buys renters the insurance if something goes wrong she can use a strategy of insurance companies.

• The insurance companies will only cover the loses of her apartment while the policy is taking effect.

• Those individuals can enroll in an insurance plan but accidents will not be covered by the company. For events happening when the policy is already valid are subject to coverage.

Hence the option D is correct.

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