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.

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Definitions:

Unlimited Life

Refers to entities, typically corporations, that are structured to continue operations indefinitely unless dissolved.

Ease of Formation

The simplicity and straightforwardness associated with establishing a new enterprise or legal entity, typically influenced by the regulatory and legal environment.

Single Tax

A system in which only one type of tax is levied, often proposed to simplify tax systems.

Small Business Administration (SBA)

A U.S. government agency that provides support to entrepreneurs and small businesses, including loans and grants.