Loss severity is defined as the
A)probable size of the losses which may occur during some period.
B)probable number of losses which may occur during some period.
C)probability that any particular piece of property may be totally destroyed.
D)probability that a liability judgment may exceed a firm's net worth.

Question

Quizplus · Accepted Answer

Loss severity refers to the magnitude of losses that may occur during a given period. It is the probable size of losses, including the value of property that may be destroyed, the amount of liability judgments that may be awarded, and the cost of settling claims. Therefore, option A is the correct choice. Option B refers to loss frequency, while options C and D relate to specific aspects of loss severity.

Loss Severity Is Defined as the