For a loss to be insurable, it generally must be:

Why A is correct

Insurable losses must be fortuitous — accidental and unexpected, arising from chance rather than from the insured's deliberate act. This requirement is essential because insurance is designed to protect against uncertainty; a loss the insured can cause on purpose is not an insurable risk. Fortuity also supports public policy against encouraging losses, since a person must not be able to profit by intentionally destroying an insured interest. The loss need not be caused by anyone's negligence: fire, illness, windstorm, and many other accidental events qualify even when no one is at fault. What matters is that the event and the resulting loss were outside the insured's control and not intended.

Why the other options are wrong

• B) A planned, intentional loss is the opposite of fortuitous and is never a proper subject of insurance coverage, because the insured would have both the motive and the opportunity to collect on a manufactured loss.
• C) A loss certain to occur within the year is a certainty rather than a risk; insurance covers contingent and unknown events, so a guaranteed loss cannot be insured. A known, predictable event leaves no uncertainty for the insurer to pool and price, so it falls outside the definition of risk.
• D) A loss can be insurable even without anyone's negligence — fire, illness, and accidents caused by no one all qualify as long as they are accidental and fortuitous. What matters for insurability is that the loss was unintended and beyond the insured's control at the time it occurred.

Memory hook

If you plan it, it is not insurance — it is misconduct. Losses must be fortuitous.

Why A is correct

An insurable loss must be fortuitous: accidental, unintentional, and beyond the insured's control. A loss that is certain to occur — such as a known terminal illness at application — is not fortuitous, so the arrangement would be a pre-funded payout rather than insurance. This fortuitousness requirement is the core protection against adverse selection and guaranteed-loss abuse.

Why the other options are wrong

• B) Measurability of the loss is satisfied — the illness's costs are quantifiable; the defect is that the loss is certain, not that it cannot be measured.
• C) The pool size is a practical concern of the insurer, but the disqualifying defect here is the certainty of the loss, not pool size.
• D) The applicant may well have an insurable interest; the problem is the lack of fortuitousness, not the interest.

Memory hook

Fortuitous = the loss must be a surprise. A known illness at application is a scheduled payout, not insurance.