All of the following are disadvantages of using insurance in a 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.

Question

Quizplus · Accepted Answer

Option C describes a disadvantage of using insurance in a risk management program, but options A, B, and D describe other potential disadvantages. Option A refers to the opportunity cost of paying premiums in advance, which could be used for other purposes. Option B highlights the fact that selecting and negotiating coverage requires resources, including time and effort. Option D notes that an overreliance on insurance may cause individuals to overlook or diminish the importance of loss control measures. Therefore, option C is the best choice for this question.

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