Four Conditions for Insurable Risks

A risk which is insurable satisfies four conditions

  1. homogeneous
  2. fortuitous
    • occurrence and severity must be beyond the control of the insured
  3. definite loss
    • in time and amount
    • otherwise how can the benefit be determined?
  4. noncatastrophic
    • otherwise impact would be immeasurable
    • eg, exclusions for war

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