All of the following statements about retention are true except

Question

Question: All of the following statements about retention are true except

Options:

1. It may be used deliberately if commercial insurance is unavailable
2. It may be used passively because of ignorance
3. Its use is most appropriate for low-frequency, high-severity types of risks
4. Its use results in cost savings if losses are less than the cost of insurance

Answer 1

3. Its use is most appropriate for low-frequency, high-severity types of risks

Statements about risk retention like "It may be used deliberately if commercial insurance is unavailable, it may be used passively because of ignorance and its use results in cost savings if losses are less than the cost of insurance" are true EXCEPT its use is most appropriate for low-frequency, high-severity types of risks.