My cousin and I are going to try to start a business so we needed insurance. The insurance is a 160 something dollars a month and covers 2 1,000,000 dollars accidents. Where do they make there money?
In: Economics
In your example, you’re paying $160 a month right. Well what if nothing happens in that month? Well the company just got $160, for free, for doing nothing. An insurance company makes money when something that is unlikely to happen, doesnt happen, and continues to not happen.
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