What demonstrates an increase in the probability of a loss occurring?

An increase in exposure is directly related to a heightened probability of loss occurring. In the context of risk management, exposure refers to the extent to which an entity or individual is subject to the possibility of experiencing a loss. For example, in real estate, greater exposure can arise from owning multiple properties, as this increases the likelihood that one of those properties could encounter issues leading to a loss, such as damage from natural disasters or market fluctuations.

Maintaining a high level of exposure, such as having numerous assets or investments without corresponding safeguards, naturally elevates the risk associated with those assets. Conversely, risk avoidance, retention, or accepting losses does not inherently increase the probability of a loss; rather, they represent strategies employed to manage or mitigate risk.

Understanding exposure is crucial in the field of title insurance, as it helps professionals assess the level of risk connected with insuring various properties, ultimately guiding decision-making related to coverage and premiums.