Categories of Private Pools

B

The answer to this question is B. Private pools can fall into two categories: risk retention groups (RRGs) and purchasing groups (PGs).

RRGs are formed by members of a similar profession or business who come together to share the risk of liability that they face. The members of an RRG are the owners of the company, and they pool their resources to provide coverage for themselves. The RRG assumes the risk of the members' liability claims and pays for the damages that result from those claims.

PGs, on the other hand, are formed by individuals or entities that share a common interest but are not necessarily in the same business or profession. The purpose of a PG is to purchase liability insurance at a lower cost than would be possible individually. The members of a PG do not own the company, but rather they join together to purchase insurance coverage as a group.

In summary, private pools fall into two categories: risk retention groups and purchasing groups. Risk retention groups are formed by members of a similar profession or business who come together to share the risk of liability that they face, while purchasing groups are formed by individuals or entities that share a common interest but are not necessarily in the same business or profession, who come together to purchase liability insurance at a lower cost than would be possible individually.