( 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

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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