The company's ability to absorb losses will determine what smaller potential losses will be insured.

Question

Quizplus · Accepted Answer

If a company has a higher ability to absorb losses, they may choose to insure smaller potential losses because they can handle larger losses on their own. If a company has a lower ability to absorb losses, they may choose to insure against larger and smaller potential losses to protect themselves financially.

The Company's Ability to Absorb Losses Will Determine What Smaller