What type of risk is considered insurable?

Pure risk is considered insurable because it involves situations that can result in only a loss or no loss, without the possibility of a gain. This type of risk includes events such as fire, theft, or natural disasters, which can lead to financial loss but do not produce a chance of profit. Insurance is designed to protect individuals and businesses from these risks by providing financial compensation in the event of loss.

Insurers can assess the frequency and severity of pure risks, allowing them to calculate premiums and create policies that adequately cover potential losses. This predictability is essential for the insurance model to function effectively, making pure risk a fundamental component of the insurance industry.

In contrast, speculative risks, market risks, and financial risks involve uncertain outcomes that can include the possibility of profit as well as loss, making them less suitable for traditional insurance coverage. Therefore, pure risk stands out as the type of risk that is typically insurable.