In case of automobile insurance, all drivers are required to pay auto insurance premiums, which are then used by the insurance companies to compensate the victims. This is known as____________.

loss spreading profit spreading fair and just response balance of loss

loss spreading

Tort law can be used as a tool to spread loss to a wider community. For example, where the manufacturer of a product has to pay compensation, the manufacturer may recover the costs by transferring this to the consumers by increasing the price of the product. In another example of automobile insurance, all drivers are required to pay auto insurance premiums, which are then used by the insurance companies to compensate the victims.