General Insurance PrinciplesQuestion 179 of 716
Which of the following is an example of a pure risk that an insurer would accept?
a.Placing a bet on the outcome of a professional sporting event
b.The possibility that an insured will die during the policy term
c.Opening a new restaurant in a crowded and competitive local market
d.Buying common stock in an unproven technology start-up
Explanation
Only pure risk, which involves the chance of loss or no loss with no opportunity for gain, is insurable. Investments, business ventures, and gambling are speculative risks because they include a chance of gain and are not insurable.
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Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)