The reduction of risk that occurs with purchasing insurance is primarily due to the
A)hazards you face.
B)principle of indemnity.
C)law of large numbers.
D)large-loss principle.

Question

Quizplus · Accepted Answer

The reduction of risk that occurs with purchasing insurance is primarily due to the law of large numbers. This principle states that the more individuals or risks that are pooled together, the more accurate the prediction of loss will be. Insurance companies rely on this principle to calculate premiums and help ensure that losses are adequately covered.

The Reduction of Risk That Occurs with Purchasing Insurance Is