Question

"spreading the risk" is an insurance principle that allows policy holders to be protected from expensive losses in exchange for a relatively small payment

Answer 1

Spreading the risk is an insurance principle that allows policy holders to be protected from expensive losses in exchange for a relatively small payment.

Step-by-step explanation:

Spreading the risk is an insurance principle that allows policy holders to be protected from expensive losses in exchange for a relatively small payment. This principle is based on the concept of sharing risk among a large group of individuals. By pooling together the premiums paid by policy holders, insurance companies are able to provide financial protection to those who experience a covered event.

For example, in auto insurance, all policy holders contribute premiums to the insurance company. When there is an accident and a policy holder suffers a loss greater than the deductible amount, the insurance company will cover the remaining amount. This way, the risk of a significant financial loss is spread across many policy holders.