XYZ Insurance Company Writes Coverage for Most Perils Which Can

question 40

Multiple Choice

XYZ Insurance Company writes coverage for most perils which can damage property.XYZ,however,does not write flood insurance on property located in flood plains.Which requirement of an ideally insurable risk might be violated if XYZ wrote flood insurance on property located in flood plains?

• A)There must be a large number of similar exposure units.
• B)The loss should not be catastrophic.
• C)The chance of loss must be calculable.
• D)The losses must be determinable and measurable.

---

Definitions:

Franchisor Fee

A payment made by a franchisee to a franchisor, typically for the right to use the franchisor's trademark, operational system, and ongoing support.

Franchises

Business models that allow individuals to operate their own outlets of a larger company, using its brand, processes, and resources.

Company Stores

Retail establishments operated by a company that sells its own products to its employees or the general public, often in a monopolistic or semi-monopolistic market.

Franchising Relationship

A business model that involves a franchisor licensing its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee.