High Capacity Risks are usually characterized by which of the following?

High capacity risks are typically associated with very lofty limits of insurance coverage. This term refers to situations or entities that require significant amounts of insurance coverage due to their nature or size. These risks may involve large assets, extensive operations, or complex liabilities that necessitate substantial financial protection to mitigate the potential financial impact of losses.

Insurers must assess and manage these high capacity risks carefully because they can have substantial implications for their reserves and overall risk exposure. Therefore, policies written for high capacity risks are often tailored to provide the extensive limits that matches the potential severity of loss faced by the insured.

In contrast, low insurance limits would not apply to high capacity risks, as these entities usually require coverage that aligns with their substantial potential liabilities. Similarly, while there might be high underwriting challenges and elevated likelihoods of loss in certain contexts, these are not definitive characteristics of high capacity risks themselves. The defining feature is indeed the need for very lofty limits of coverage.