General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement correctly describes the role of uncertainty in making a risk insurable?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Uncertainty is essential to insurability. If the occurrence or timing of a loss is certain — for example, a known imminent medical expense — there is no fortuitous event to insure, and the arrangement would not be insurance. Fortuitous losses, uncertain in occurrence or timing for the individual insured, are the only proper subject of insurance. This is why preexisting, known losses cannot be covered retroactively.
Why the other options are wrong
- B) A certain loss is uninsurable; insurers price against uncertain, fortuitous events, not guaranteed payouts.
- C) Uncertainty is the defining feature of the risk that insurance transfers; without it there is no risk to insure.
- D) Guaranteed losses for every insured would destroy risk pooling and make the arrangement a payment plan, not insurance.
Memory hook
Insure the maybe, not the must. Certainty kills insurability.