Which type of risk is considered insurable?

Particular risks are considered insurable because they involve risks that are specific to an individual or a single entity, such as a person's car being damaged in an accident or a homeowner's property being damaged by fire. These risks can typically be quantified and assessed, making it feasible for insurance companies to provide coverage against them.

Fundamental risks, which impact large groups of people or the entire economy (like natural disasters or pandemics), are often not insurable due to their catastrophic nature and the unpredictability involved. Speculative risks, on the other hand, involve a chance of both gain and loss, such as investments in the stock market. Insurance is not designed to cover this type of risk, as it does not align with the needs of risk transfer that insurance fulfills.

Therefore, insurability is fundamentally linked to particular risks because they can be specifically defined, measured, and managed, allowing insurance policies to be crafted effectively.