Which of the following is a financial document providing protection against specific risks?

• A. Insurance Rating System
• B. Insurance Policy
• C. Insuring Agreement
• D. Coverage Statement

Answer: (B)

The answer is the insurance policy, which is a formal contract between the insurer and the insured. It outlines the terms, coverage limits, conditions, and exclusions associated with a particular insurance product. Essentially, the insurance policy provides a financial safety net against specific risks that the insured may face, such as property damage, liability, or loss of income.

An insurance policy details how much the insurer will pay in the event of a covered loss and under what circumstances. It serves as a legal document that ensures both parties understand their rights and obligations, making it the most appropriate choice for a document that offers protection against specific risks.

Understanding the other options can provide further clarity. An insurance rating system is primarily concerned with evaluating the financial strength and reliability of an insurance company, while an insuring agreement refers to the specific terms of coverage that outline what risks are insured. A coverage statement tends to be more informal and may summarize coverage details but does not serve as the legally binding contract that an insurance policy does. This is why the insurance policy is the best answer to the question regarding a financial document providing protection against specific risks.