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Characteristics of an Insurable Risk
1) Large number of similar objects
2) Losses are accidental/unintentional
3) Losses can be determined/measured
4) Losses should not be catastrophic
5) Large Loss Principle
6) Insurable Interest
Insurance companies (or insurers) prefer their risks to have the six characteristics of Insurable risks. Can you think of any insurable risk that lacks any one of the characteristics? You can name the risk, loss exposure or peril and explain what characteristics this lacks.
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