For a loss to be insurable, it generally must be:
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Answer & full 3-part explanation (select an option above, or peek)
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.