What is an insurable risk?

An insurable risk is defined as a risk that aligns with the criteria set forth by an insurance company for providing coverage. Insurance companies evaluate risks to determine if they can be insured based on factors such as the likelihood of loss and the ability to quantify potential claims. For a risk to be considered insurable, it typically must be predictable, measurable, and not excessively high in probability that it would lead to catastrophic losses that outweigh potential premiums collected. This is why the correct answer focuses on the insurance company’s criteria for coverage, ensuring both the insurer's financial stability and the insured's protection.

Other options describe scenarios that do not accurately reflect the concept of insurable risks. A high-risk scenario avoided by insurers does not fit the definition, as it indicates non-eligible risks. Liability insurance covers specific types of risks but does not imply that all insurable risks come under this category. Similarly, limiting discussions of insurable risks solely to property damage overlooks numerous other types of risks pertinent to various insurance products.