In: Economics
Property insurance policies typically exclude coverage for losses caused by war. This is because
Select one:
a. losses from war are potentially catastrophic.
b. insuring war creates an adverse selection problem.
c. none of the above
d. the courts have defined the term war broadly.
Option A is correct. Loss or damage from war are catastrophic which could bankrupt the insurance companies and hence they provide a clause of war exclusion in their policies