ECONOMICS
INSURANCE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
The chance of loss must be calculable
|
|
|
The loss must cause an economic hardship on the insurer
|
|
|
There must be a large number of homogeneous units
|
|
|
The insured event must be accidental
|
Detailed explanation-1: -An insurable risk must involve a loss that is definite as to cause, time, and place.
Detailed explanation-2: -The most common examples are key property damage risks, such as floods, fires, earthquakes, and hurricanes. Litigation is the most common example of pure risk in liability. These risks are generally insurable.
Detailed explanation-3: -Most pure risks can be divided into three categories: personal risks that affect the income-earning power of the insured person, property risks, and liability risks that cover losses resulting from social interactions.
Detailed explanation-4: -Potential for Catastrophic Loss-this applies to non-insurable risks like war, nuclear hazards or even earthquakes. When one of these types of catastrophic losses occur, the amounts insurers could be liable for paying are so high that it would put them out of business or severely shake their financial stability.