Risk is present in any number of situations. For example, people in the United States may experience one or more of the following types of risk. Consider each of the following, and discuss the type of risk that is present in each situation. Is the risk insurable? Explain your answers.
- The Department of Homeland Security alerts the nation of a possible attack by terrorists.
- A home may be severely damaged by fire.
- An investor purchases 100 shares of stock for a popular computer, tablet, and smartphone manufacturer.
- A river that periodically overflows may cause substantial property damage to thousands of homes in a floodplain.
- Home buyers may be faced with higher mortgage payments if the Federal Reserve raises interest rates at the next meeting.
- A worker on vacation plays the slot machines at the casino.
When one says that an insurance policy is aleatory or talks about a contract of adhesion, what is that person referring to?