***this is a legitimate question, and I’m leaving names out so there are no violations. Please set personal opinions aside when replying. ***
I recently heard of a NY businessman who received a fine in NY civil court for inflating the values of his assets to “banks and insurance companies” to get better rates.
I understand how inflated values would help him get a lower interest rate on a bank loan, but how does inflating the value of an asset to an insurance company help him get lower premiums?
I would assume a higher “value” would attract a higher premium since the insurance company is risking a larger loss.
In: Economics
After reading DarkAlmans reply, I’ve been searching high and low for an answer, and am now wondering when assessing the premium of a single specific asset, do the actuaries take into account the over inflated value of ***ALL*** the assets/properties owned by the company of the insured?
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