Risk Management Temple Exam 2 Practice

Worry Value will increase if Insurance coverage decreases?

Insurance coverage decreases Insurance coverage increases Premium increases Monetary cost increases

Correct Answer:

Insurance coverage decreases

Explanation:

Protection level and worry value move inversely: when insurance coverage declines, potential losses become larger and more uncertain, so the worry value increases. Worry value measures how much concern or risk aversion is felt given potential outcomes; with less protection, the financial impact of a loss is bigger, raising that concern. If coverage increases, exposure drops, which reduces worry. The other factors—premium or monetary cost rising—are about costs, not the direct level of concern tied to protection, so they don’t explain why worry value would rise.

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