General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insurer describes a 'possible loss situation' as a circumstance in which:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A risk situation involves possible loss when the outcome is uncertain: the insured may suffer a financial loss or may not. This two-way uncertainty is the essence of insurable risk. If the loss were certain, it would not be a risk but a scheduled expense; if only gain were possible, it would be a speculative opportunity. Possible-loss situations are exactly what insurance is designed to handle.
Why the other options are wrong
- B) A certain loss is not a risk; it is a known cost and is uninsurable.
- C) A gain-only possibility is not a loss situation at all and cannot support insurance.
- D) An intended loss lacks fortuity and is neither a proper risk nor an insurable one.
Memory hook
Possible loss = maybe yes, maybe no. That 'maybe' is the whole business of insurance.