What can be a typical reason for an insurer to refuse coverage?

An insurer may refuse coverage when the associated risk is deemed too high because insurers operate on the principle of risk management. They assess the likelihood of a claim being made based on various factors, and if the potential for loss exceeds the insurer’s acceptable threshold, they may choose to deny coverage. High-risk situations can arise from a variety of factors, such as the applicant's previous claims history, the nature of the property being insured, or specific characteristics of the applicant that suggest a higher likelihood of future claims. This practice is in place to protect the insurer from financial loss and to ensure that they can maintain profitability and solvency.

In contrast, the reasons outlined in the other options point to situational or administrative criteria that could influence the availability of coverage but do not necessarily reflect the inherent risk assessment process as directly as option C does. For example, while residing outside the coverage territory may lead to a denial, it may result from policy limitations rather than an assessment of risk. Similarly, factors like a low credit score or failure to prove insurability may affect the underwriting process or terms of coverage but do not directly relate to the assessment of risk that leads to a coverage refusal.