Kentucky Insurance Adjuster Practice Exam 2025 – Complete Test Prep

In the context of insurance and risk management, a pure risk is defined specifically by the potential outcomes it presents. The correct choice accurately captures this definition.

A pure risk involves situations where there can either be a loss or no loss at all, with no possibility for a gain. This characteristic is central to understanding pure risk, as it is fundamentally opposed to speculative risk, where outcomes can include a gain, a loss, or no change at all. For example, insuring a home against fire damage is a scenario characterized by pure risk—if a fire occurs, there is a loss; if it doesn’t, there is no loss, but no potential for earning from the situation either.

Thus, the emphasis on having only the two potential outcomes—loss or no loss—highlights the essence of what makes a risk "pure." Recognizing this distinction is essential for anyone engaged in insurance practices, as it helps in determining the types of risks that can be appropriately insured.

In contrast, the other options suggest outcomes that involve the possibility of gain or future benefits, thereby illustrating the fundamental difference between pure risk and speculative risk. Future planning and uncertain gain do not fit within the confines of pure risk, which is strictly about loss scenarios.