What are the two components that the subject matter of insurance must include?

The correct understanding of the components that the subject matter of insurance must include primarily revolves around the item insured and its location. In essence, the item insured refers to the specific asset or property that is being covered by the insurance policy, such as a home, vehicle, or business equipment. The location of the insured item is equally important because the risk associated with the insured item can vary significantly based on where it is situated. For example, a house in a flood-prone area may require different coverage considerations compared to the same house in a low-risk location.

This dual focus helps establish the scope of coverage and the specific risks that the policy addresses, ensuring that the insurer accurately evaluates and underwrites the policy based on the item’s characteristics and geographical context. Other options, while they may touch upon aspects of insurance, do not encompass both necessary components in relation to the subject matter of the insurance itself.