General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
One characteristic of an ideally insurable risk is that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An ideal insurable risk involves a large number of homogeneous exposures - many similar units exposed to the same peril - because that enables the insurer to predict losses statistically and set affordable premiums. Other ideal characteristics include a fortuitous, definite, measurable loss; an economically feasible premium; and a loss that is not catastrophic to the pool.
Why the other options are wrong
- B) A certain loss is a known expense, not an insurable risk.
- C) Insurers need similarity within the covered group, not identity across the entire population.
- D) A loss too large for any pool is catastrophic and generally not ideally insurable through private markets alone.
Memory hook
Many similar souls = predictable bill. That's the cornerstone of ideal insurability.