Buying insurance from a mutual may not always be desirable because:
A) the mutual is trying to make a profit for the stockholders
B) you may be paying for other insureds' losses
C) premiums may be greater than that of a stock company if the mutual is improperly managed
D) the officers of the company are not responsible to the policy holders

Question

Quizplus · Accepted Answer

Mutual insurance companies are owned by policyholders, and premiums collected are used to pay claims and cover expenses. However, if the mutual is improperly managed, premiums may be higher than those of a stock company, which has investors seeking profits as its main goal. Therefore, buying insurance from a mutual may not always be desirable if it is not properly managed.

Buying Insurance from a Mutual May Not Always Be Desirable