Insurance works because it:
A) reallocates the costs of unforeseen events, sparing any individual from taking the full hit.
B) makes it less likely that their clients will experience unforeseen events.
C) prevents any one individual from experiencing all the unforeseen events.
D) None of these statements is true.

Question

Quizplus · Accepted Answer

Insurance is a risk management technique that reallocates the financial costs of unforeseen events from an individual or business to an insurance company. By doing so, insurance spares any individual from taking the full hit in the event of an unexpected loss.

Insurance Works Because It