Final answer:
The majority of the premium for boiler and machinery coverage is used to cover anticipated losses, with remaining funds allocated to running the company and ensuring profits.
Step-by-step explanation:
The majority of the premium paid for the boiler and machinery coverage is primarily used for anticipated loss. Premiums are calculated to cover the average person's claims over time. Besides these claims, they also need to cover the costs of running the insurance company, which includes administrative costs such as hiring workers, administering accounts, and processing claims, as well as leaving room for the firm's profits. Thus, while some of the premium goes towards company overhead and underwriting, and potentially for services like inspections, the largest portion is dedicated to covering anticipated losses.