( a)Outlinethe principal differences between speculative risk and pure risk . ( b)Explain which of the...

( a)Outlinethe principal differences between speculative risk and pure risk . ( b)Explain which of the above risk is more commonly associated with insurance policies and provide examples of the insured risks

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Expert Solution

a. Speculative risk involves the possibility of both gain and loss . Under this type of risk one may win or may lose . One may earn profit but may has to incur losses as well .

Pure risk only considers the possibility of loss or no loss i.e. either one losses or doesn't lose. There's no concept of gain here .

b. Pure risk is more commonly associated with insurance policies as such policies may provide risk coverage when it comes to pure risk .

Insured risks are such risks against which the landlord of a property decides to insure his belongings such as flood , lightening, explosion, earthquake, storm , civil commotion, terrorism , riot , impacts by vehicles and many others .

Rahul Sunny answered 2 years ago

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