General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which of the following is NOT a characteristic of an ideally insurable risk?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An ideally insurable risk requires losses that are uncertain and fortuitous — possible but not certain. If every insured were certain to suffer the loss, there would be no risk to transfer, the arrangement would be a pre-funded payout rather than insurance, and the contract would fail the basic requirement of covering a contingent event. Large numbers of similar units, measurable losses, and accidental causes are genuine characteristics of an ideally insurable risk.
Why the other options are wrong
- B) A large number of similar exposures is required so the law of large numbers can make aggregate losses predictable — this IS a characteristic.
- C) Losses must be calculable so the insurer can set a sound premium — this IS a characteristic of insurable risk.
- D) Losses must be accidental and fortuitous, not intentionally caused or certain — this IS a required characteristic.
Memory hook
Certain loss = no risk. If it is guaranteed, it fails the insurability test.