Why might a person choose to use catastrophe coverage?

• A. To cover minor, everyday losses
• B. To prepare for significant financial impacts from disasters
• C. To reduce their overall insurance expenditure
• D. To comply with basic insurance requirements

Answer: (B)

Choosing to use catastrophe coverage primarily serves to protect individuals from significant financial impacts resulting from large-scale disasters, such as natural calamities that can cause extensive damage. This type of coverage is designed to safeguard against events that lead to substantial losses, which could be financially devastating without adequate insurance in place.

When individuals face the prospect of major disasters, such as hurricanes, earthquakes, floods, or wildfires, the cost associated with recovery and rebuilding can far exceed typical insurance limits. Catastrophe coverage specifically addresses these high-stakes scenarios, ensuring that policyholders have the resources needed to recover and rebuild after such catastrophic events.

The other choices, while somewhat relevant, do not align with the primary purpose of catastrophe coverage. Coverage for minor, everyday losses focuses on routine incidents rather than large-scale disasters. Reducing overall insurance expenditure does not typically align with the goal of ensuring protection against significant, unpredictable risks associated with catastrophes. Lastly, while complying with basic insurance requirements may be a factor in some insurance decisions, it does not specifically highlight the unique protective benefits of catastrophe coverage.