General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which characteristic is generally required for a risk to be considered ideally insurable?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
An ideally insurable risk must involve a loss that is measurable and definite as to amount and timing, fortuitous (accidental, not intentional), and predictable across a large homogeneous group. Other ideal characteristics include large numbers of similar exposures, non-catastrophic losses (so many claims do not hit at once), and an insurable interest on the part of the insured.
Why the other options are wrong
- A) Catastrophic losses that affect many exposures simultaneously are hard to insure because they break the law of large numbers; ideal risks spread losses broadly.
- C) The insured must have an insurable interest; without it the policy would be a wagering contract and unenforceable.
- D) Speculative risks — those with a chance of gain — are generally NOT insurable; ideal risks are pure risks.
Memory hook
Insurable risks are: measurable, fortuitous, predictable, numerous, non-catastrophic, and owned (insurable interest).