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Simple English definitions for legal terms
pure risk
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A quick definition of pure risk:
Pure Risk: Pure risk is when there is a chance of something bad happening and no chance of anything good happening. It always results in a loss. For example, if you buy a car, there is a risk that it might get stolen or damaged in an accident. This is a pure risk because if it happens, you will lose your car and money. Insurance companies help protect people from pure risks by offering policies that cover the potential losses.
A more thorough explanation:
Definition: Pure risk refers to the uncertainty of a result, happening, or loss that always results in a loss. It is the chance of injury, damage, or loss, and the existence and extent of the possibility of harm.
Examples: Examples of pure risk include natural disasters like earthquakes, floods, and hurricanes, as well as accidents like car crashes and fires. These events always result in a loss, and there is no possibility of gain.
Explanation: Pure risk is a type of risk that cannot be avoided, only managed. Insurance companies offer policies to help individuals and businesses manage the financial impact of pure risks. For example, a homeowner's insurance policy can help cover the cost of damages caused by a fire or a natural disaster. By paying a premium, the homeowner transfers the risk of a potential loss to the insurance company.