General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A risk cannot be ideally insured if the premium that would have to be charged is so high that few people could pay it. This reflects the ideal insurable risk requirement that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Economic feasibility is one of the criteria of an ideally insurable risk. If a risk is so expensive to cover that the premium approaches or exceeds the value of the loss, insurance serves no practical purpose and few will buy it. Insurers therefore favor risks where the probable loss is moderate enough that the premium remains affordable while still covering claims and expenses. This is also why very high-probability, high-cost conditions are difficult to insure privately.
Why the other options are wrong
- B) Catastrophic, community-wide losses are generally hard to insure because they violate the need for independent exposures.
- C) The chance of loss must be calculable for an ideal risk; incalculability makes pricing impossible.
- D) The insured must hold an insurable interest; its absence makes the contract a wager and unenforceable.
Memory hook
If the premium eats the loss, the insurance has no point. Affordable math is an ideal-risk requirement.