General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
A loss that the insured knows is certain to occur at a scheduled time cannot be properly insured because:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Insurance covers only fortuitous losses — events that are contingent or unknown, so that occurrence and timing are uncertain from the insured's perspective. A scheduled, certain loss is a known expense rather than a risk: insuring it would be pre-funding a definite payment, not transferring uncertainty, and would create severe adverse selection if such losses were covered. This is why known conditions and planned treatments are not the proper subject of insurance.
Why the other options are wrong
- B) The size of the loss does not determine insurability; certainty does. Even a large certain loss is not a fortuitous risk.
- C) Certain losses are not automatically paid by the government; the reason they are uninsurable is the lack of fortuity, not government involvement.
- D) There is no legal rule that the premium must be zero for certain losses; such losses are simply outside the scope of risk transfer.
Memory hook
Fortuitous = a surprise is required. A scheduled certainty is a bill, not a risk.