What Do People Purchase as a Form of Risk Management to Protect Themselves From Losing a Lot of Money in the Event Something Happens to Them or Their Property?

What Do People Purchase as a Form of Risk Management to Protect Themselves From Losing a Lot of Money in the Event Something Happens to Them or Their Property?

A) Liability

B) Insurance

C) Warranty

D)Deductibles

The correct answer is: B) Insurance. 

People purchase insurance as a form of risk management to protect themselves from significant financial losses in case of accidents or property damage. When individuals buy insurance policies, they pay premiums to the insurer. In the event of a covered incident, the insurer uses these funds to compensate the policyholder, mitigating the impact of the loss. This proactive approach helps individuals and businesses manage unpredictable situations, making insurance a vital tool in financial planning and risk mitigation.

What is Insurance?

Insurance is a contractual agreement providing financial protection to policyholders against specific losses. Through policies, individuals can hedge against accidents, injuries, property damage, and liability. Various types such as life, health, homeowners, and auto insurance offer essential safeguards. Key components include premiums, deductibles, and policy limits, ensuring comprehensive coverage.