Question

There have been a series of large judgments in product liability cases against companies producing hair dryers. If this trend continues, how will insurance companies respond to dryer manufacturers? Will the premiums charged for liability insurance for hair dryers increase or decrease?

1) Increase
2) Decrease

Answer 1

Insurance companies are likely to respond to the series of large judgments in product liability cases against hair dryer manufacturers by increasing the premiums charged for liability insurance for hair dryers.

Step-by-step explanation:

If there have been a series of large judgments in product liability cases against companies producing hair dryers, insurance companies are likely to respond by increasing the premiums charged for liability insurance for hair dryers. This is because insurance companies base their premiums on the level of risk associated with the product. If there is a trend of large judgments, it suggests that hair dryers have a higher likelihood of causing harm, which increases the risk for the insurance companies.