another classification is between pure risks and speculative risks.the
latter are in the nature of betting or gambling where the risk is,to some
extant, under the control of the person concerned, while a pure risk is not
so. it is more in the nature of an act of god. insurace deals with only
pure risks and not speculative risks. this point will be elaborated later,in
the chapter on the principles of life insurance.
the mechanism of insurance is very simple. people who are exposed to
the same risks come together and agree that, if any one of them suffers a
loss, the others will share the loss and make good to the person who lost.
all people who send goods by ships are exposed to the same risk, which
are related to water damage, sinking of vessal, priacy,etc.
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