A loss must be fortuitous to be insurable. Which statement best describes a fortuitous loss?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Fortuitous means the loss occurs by accident or chance rather than through the insured's deliberate act. Insurance is designed to cover uncertain, unintentional events: a loss the insured intentionally causes is not fortuitous and is excluded, and a scheduled or certain loss cannot be insured because there is no risk to transfer. Ordinary wear and tear is likewise excluded because it is inevitable and expected. The fortuity requirement prevents insurance from becoming a vehicle for deliberate or guaranteed financial events and preserves the random-loss assumption on which the law of large numbers depends.
Why the other options are wrong
- B) An intentionally caused loss is not fortuitous; intentional acts are excluded from coverage and may constitute insurance fraud.
- C) An event certain to occur on a fixed date involves no uncertainty, so it is not a fortuitous loss and is not an insurable risk.
- D) Wear and tear is a predictable, gradual deterioration that is expected rather than accidental, and it is excluded from coverage.
Memory hook
Fortuitous = accidental and by chance. You cannot insure what you intend or what is already guaranteed.