Why is speculative risk not insurable?

• A. It has a certain loss
• B. It is always insurable
• C. It has no chance of loss
• D. It involves both loss and gain

Answer: (D)

Speculative risk isn’t insurable because insurance covers pure risks—where the outcome is either a loss or no loss, with no possibility of a profit. When a risk can result in both a loss and a gain, it becomes speculative, and insurers can’t reliably price or pool that risk to cover losses without encouraging risky behavior or profits. So the option stating that speculative risk involves both loss and gain is the best answer. The other statements don’t capture why insurance excludes speculative risk: a sure loss isn’t the defining factor, risk-free scenarios aren’t risks to insure, and the claim that it’s always insurable is simply false.