Answer to Question #123605 in Microeconomics for Oumou Diallo

Question

The insurance market covers various types of risks. There are all kinds of insurance -- home insurance, life insurance, car insurance, to name a few. Some insurance, such as car and health insurance, is mandatory. Some, such as life insurance and catastrophe insurance, are optional. What do you think are the common features of the risks that are required to be insured mandatory? And why do these risks require mandatory insurance?

Answer 1

The common features for mandatory insurance are ;pure risk may occur, to save the insured from the expense of compensating the loss incurred.

The risks require mandatory insurance because they cannot be controlled.