All of the Following Are Disadvantages of Using Insurance in a Commercial

question 35

Multiple Choice

All of the following are disadvantages of using insurance in a commercial risk management program EXCEPT

• A)There is an opportunity cost because premiums must be paid in advance.
• B)Considerable time and effort must be spent selecting and negotiating coverages.
• C)It results in considerable fluctuations in earnings after losses occur.
• D)Attitudes toward loss control may become lax when losses are insured.

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Definitions:

Unsecured Term Loans

A loan made to an established business that has demonstrated a strong overall credit profile.

Creditworthiness

An assessment of the likelihood that a borrower can repay a loan or financial obligation.

Applicant's Financial Strength

A measure of an applicant's ability to meet financial obligations, often assessed during loan or credit applications.

Capital

Financial assets or the financial value of assets, such as cash and goods, used to start or operate a business.