General Insurance PrinciplesQuestion 127 of 158
Which of the following is a PURE risk and therefore potentially insurable?
a.Buying shares of a technology company hoping the price rises
b.The chance that a kitchen grease fire damages a home
c.Betting on the outcome of a college basketball game
d.Opening a new restaurant with uncertain profits
Explanation
Pure risk produces either loss or no loss, never gain, and is the only type insurance addresses. A kitchen fire fits that definition. Buying stock, gambling, and opening a business all carry a chance of GAIN, which makes them speculative and uninsurable.
Law Reference: Cal. Ins. Code §22Practice all 158 questions free — no signup required.
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