A small business owner asks her broker to insure her chance of profit on a new restaurant venture. The broker should explain that this exposure is not insurable because it is:
a.A speculative risk that includes the chance of gain
b.A legal hazard inherent in the restaurant industry
c.A morale hazard rather than a peril
d.A pure risk that fails the DICE test
Explanation
Insurers will only write pure risk — situations involving the chance of loss or no loss. The chance of profit on a business venture is speculative risk because it also includes the chance of gain, and speculative risk is uninsurable as a matter of underwriting and public policy.
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