NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Insurance
Which of the following is the best example of a pure risk that is insurable?
Loss of a house due to fire is an insurable pure risk, because the outcome is either loss or no loss, with no chance of gain. Share price falls, betting and commercial product failure are speculative risks that involve possible profit and are normally not insured.
- ALoss of a house due to fireCorrect
- BLoss from buying shares that fall in price
- CLoss from a bet on a cricket match
- DLoss from launching a new product that fails commercially
Explanation
Pure risk involves only the possibility of loss or no loss, and is generally insurable. Share price falls, betting and product failure are speculative or business risks where gain is also possible, so they are not insurable in the usual way.
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