What is a primary obligation of an insurance company?

A primary obligation of an insurance company is to pay the claims covered under the policy. This duty arises from the contract the insurer has entered into with the policyholder, where the insurer agrees to provide financial protection against specified risks in exchange for premium payments. When a policyholder experiences a loss that is covered by the policy, the insurer is obligated to assess the claim and provide compensation according to the terms of the policy. This foundational responsibility is what builds trust in the insurance relationship and allows individuals and businesses to manage risk effectively.

The other options relate to aspects of insurance but do not represent primary obligations of an insurance company. For instance, reducing premiums at all times or increasing policy coverage without additional costs would not be sustainable practices for insurance providers, as they rely on premiums collected to cover the risks they underwrite. Providing insurance for all types of risks is also not feasible; insurers assess risks to determine what they are willing to cover, which means not every potential risk can be insured.