IIQE Paper 1 Risk and Insurance question: resulting losses

IIQE Paper 1Risk and Insurance

A shop is broken into at night. Which of the following resulting losses are likely to be commercially insurable? (i) the stock that was stolen (ii) a staff member's injury during the break-in (iii) the owner's distress over the incident (iv) the cost of repairing the damaged door

A (i) and (iv) only
B (ii) and (iii) only
C (i), (ii) and (iv) only
D (i), (ii), (iii) and (iv)

Show the answer and explanation

Answer: C. (i), (ii) and (iv) only

Answer: (i), (ii) and (iv) only. Statements (i), (ii) and (iv) are true; (iii) is not.(i) True. A financial loss, measurable in money.(ii) True. A physical loss (personal injury).(iii) False. Distress is an emotional loss, which is not likely to be commercially insurable.(iv) True. A financial loss, measurable in money.Why not the others:• (i) and (iv) only: leaves out (ii), which is true.• (ii) and (iii) only: includes (iii), which is false, and leaves out (i) and (iv), which are true.• (i), (ii), (iii) and (iv): includes (iii), which is false.Watch out: Including the owner's distress because it was caused by the same event.Rule: One event can cause financial, physical and emotional losses; only the first two are likely to be commercially insurable.Source: IA P1 Study Notes, 2024 Edition (8th ed., Nov 2024; for exams from 17 Feb 2025), 1.1.1, p. 1/1