Terry: Months ago, I submitted a claim for my stolen bicycle to my insurance company. After hearing nothing for sev...

Kim on January 5, 2015

Please Explain

Please explain correct answer


Melody on January 6, 2015

Terry gives an account of how she placed a claim for her stolen bicycle to her insurance company, and after not hearing from them for several weeks contacted the firm and found out they had no record of the claim.

We are told that she has since resubmitted her claim twice and called the firm repeatedly, but has yet to receive her settlement.

She concludes from the "persistence of the error" that the company is deliberately avoiding paying up.

Answer choice (A) states: "Consumers should avoid attributing dishonesty to a corporation when the actions of the corporation might instead be explained by incompetence."

Do we know 100% that the insurance company is failing to comply due to dishonesty? No. We have not been given direct evidence of this. We merely know that repeatedly the insurance company has failed to give Terry her settlement. But, this could be due to incompetence.

Thus, the principle in answer choice (A) is being violated by Terry's reasoning, since she is attributing dishonesty to the insurance company when the actions of the company could actually be explained by incompetence.

Therefore, answer choice (A) is correct.

Hope this clears things up! Please let us know if you have any other questions.