All of the following are disadvantages of using insurance in a commercial risk management program EXCEPT
A)There is an opportunity cost because premiums must be paid in advance.
B)Considerable time and effort must be spent selecting and negotiating coverages.
C)It results in considerable fluctuations in earnings after losses occur.
D)Attitudes toward loss control may become lax when losses are insured.

Question

Quizplus · Accepted Answer

All of the options listed are disadvantages of using insurance in a commercial risk management program except for option C, which is an advantage. Insurance helps to smooth out the fluctuations in earnings that occur after a loss. Options A, B, and D are all disadvantages of using insurance as a risk management tool.

All of the Following Are Disadvantages of Using Insurance in a Commercial