Legal Definitions - pure risk

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.