Insurance Broker Certification Practice Exam

What does the term 'due to chance' signify in insurance?

1. A predictable event in the course of business

2. A loss that is outside of the insured's control

3. An accident caused by negligence

4. An expected loss from wear and tear

The correct answer is: A loss that is outside of the insured's control

The term 'due to chance' in insurance signifies a loss that is outside of the insured's control. In the context of insurance, it refers to events that are unpredictable and occur randomly, leading to potential claims against an insurance policy. This aligns with the concept of risk in insurance, where the insurer takes on the possibility of loss from unforeseen events that could not have been anticipated or influenced by the insured. For example, natural disasters, accidents, and other unexpected incidents fall under this definition, as they result from chance and are inherently uncertain. Insurers base their coverage on assessing these random risks, and this approach is fundamental to the principle of insurance as a risk management tool. The other options describe circumstances that may not necessarily involve chance or unpredictability and do not fit the definition of risks that insurance is designed to cover.