Characteristics: Large Loss

The size or magnitude of the loss must be significantly meaningful from the perspective of the claimant.
Insurance premiums must cover both the expected cost of the losses, plus the expenses for issuing and administering the policy, adjusting losses, and supplying the capital that is needed to make sure that the insurer will be able to pay claims.
For smaller losses, the latter expenses may be significantly larger than the size of the expected cost of losses.
There is no practical reason to pay such costs unless the protection offered has real value to a buyer.

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