What qualifies as an "insurable risk"?

An insurable risk is characterized by certain criteria that must be met for an insurance company to offer coverage. Specifically, the risk must be definable, measurable, and able to be calculated, allowing insurers to assess and manage their potential financial exposure. This includes factors such as predictable frequency and severity of loss, and the ability to set appropriate premiums.

For example, an insurable risk might involve events like house fires or car accidents, where the likelihood of occurrence and potential costs can be estimated based on historical data. When risks align with these criteria, they become suitable for insurance coverage, allowing individuals and organizations to protect themselves against unforeseen financial losses.

The other choices highlight aspects that do not represent what qualifies as an insurable risk. Undefined and unpredictable risks would not allow for the proper assessment of premiums, hence making them unsuitable. Risks associated only with high-value assets do not inherently qualify them without additional parameters like predictability. Lastly, risks deemed too high for insurance companies generally fall outside the insurance scope, as they present an inability for insurers to manage the potential losses effectively.