Question

In return for a premium, an insurance company must

1) Provide the insured with coverage adequate for all potential losses
2) Use standardized tables of coverage for specific risks to be excluded from coverage
3) Give the insurer valuable consideration
4) Be fair in underwriting and pay covered losses.

Answer 1

Insurance is a method that households and firms use to prevent any single event from having a significant detrimental financial effect. Regular premium payments are made by insured parties based on the probability of certain events occurring, and those who experience a specified bad experience receive payments from the group's pool of money.

Step-by-step explanation:

Insurance is a method that households and firms use to prevent any single event from having a significant detrimental financial effect. Generally, households or firms with insurance make regular payments, called premiums. The insurance company prices these premiums based on the probability of certain events occurring among a pool of people. Members of the group who then suffer a specified bad experience receive payments from this pool of money.