ga auto insuranceCar insurance in Georgia  from www.georgiacarinsurancequotes.net is an example of what would be considered a pure risk in the insurance business .  A pure risk is one that pertains to the chance of a fiscal loss or no loss. It’s distinguished primarily on the net income and loss structure from the situation. For instance, a desire for real or personal property subjects the owner towards the risk that the property is going to be damaged by windstorm; partially or totally destroyed by fire; or rendered useless directly or indirectly from possible risks with an identical character. The essence of the pure risk would be that the unfavorable event will occur or it won’t. Accordingly, the danger is designated as pure.

Human life itself is also subjected to undesirable contingencies. These relate essentially towards the damages brought on by premature death; illness and/or disability; indigenous old age; or general economic losses arising from unemployment. These are the primary risks affecting human life values that may or may not result in a loss and hence constitute pure risk situations.

Pure risks are identified for purpose of risk management and insurance as: (1) property risks; (2) personal risks, and (3) liability risks. A fourth risk category is a that arises from the failure of 3rd party performance. It is considered in detail in Chapter XVII.

Speculative Risks
Speculative risks pertain to the chance of an increase, a loss, or no loss. Quite simply, speculative risks may or may not have favorable consequences. For example, investors in securities will either experience a rise or decline within their selling price, or even the price may remain constant. This is also true regarding other types of investments and commercial ventures in general. The potential of success, failure, or a break-even operation embodies a diploma of uncertainty that is speculative in character.

The distinction between pure and speculative enables you to define insurable and uninsurable risks. Houston states that “pure risks become insurable since theoretically the person, at best, stands to break-even whichever outcome occurs. Conversely, speculative risks become uninsurable since in certain instances the individual could be tempted to use his insurance to create a profit that they wouldn’t otherwise earn even without the insurance.