General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which combination of elements must be present for a loss exposure to exist?
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
A loss exposure exists only when three elements are present: something of value that could be lost (such as the insured's health or earning power), a peril capable of causing that loss (illness, injury, disability), and a real possibility that the loss will occur. If any element is missing — for example, the value is removed or the peril cannot strike — there is no exposure to insure. This framework is the starting point for risk identification in health and disability planning.
Why the other options are wrong
- B) A policy, premium, and insurer are the components of an insurance transaction, not the elements that create an exposure.
- C) A hazard may accompany an exposure and a claim follows a loss, but an adjuster and a claim arise only after the loss and do not define the exposure.
- D) A loss that has already occurred is a realized loss, not an exposure; exposures look forward to possible loss.
Memory hook
Exposure = value + peril + possibility. Remove any one element and the exposure disappears.