0
Note that when we speak about a risk, we are not referring to a loss that has actually been suffered but a loss that is likely to occur. It is thus an expected loss. The cost of this expected loss (which is the same as the cost of the risk) is the product of two factors
The probability that the peril being insured against may happen, leading to the loss. Probability always lies between 0 and 1, where 0 means impossibility of loss occurring and 1 means certainty of it happening.
The impact or severity which is the amount of loss that may be suffered as a result of a loss. A mild earthquake may cause little or no loss whereas a major earthquake may result in widespread losses and hence more severe.
The cost of risk would increase in direct proportion with both probability and amount of loss.
When deciding whether to insure or not, one needs to weigh the cost of transferring the risk against the cost of oneself bearing the loss that may arise. The cost of transferring the risk is the insurance premium - driven by the two factors mentioned in the previous paragraphs.
The best situations for insurance would be where the probability is very low but the loss impact could be very high. In such instances, the cost of transferring the risk through its insurance [the premium] would be much lower while the cost of bearing it oneself would be very high.
What else can I help you with?
How do you start an insurance company to self insure for fire only in Canada?
You don't need to start an Insurance Company to Self Insure. Self Insurance is defined by the absence of an Insurance Company. A self Insurer simply retains the risk of a loss. If you have a group of individuals who are wanting to Self Insure then what you will Want to Start Is a "Risk Rentention Group". Risk retention Groups are licensed by your Local Insurance Regulating Authority. You should contact them regarding rules and regulations for "Risk Retention Groups".
Which reputable auto insurance company will insure high risk drivers?
Examples for auto insurance companies that will insure high risk drivers are Assurant, Allstate, Chubb Corp, FM Global, Genworth Financial or GuideOne Insurance.
Basic concept of risk and return?
The higher the risk, the higher the return.
Hard to insure homeowner's insurance?
Hard to insure homeowners insurance could mean that you have poor credit or represent high risk to a homeowners insurance company.
Discuss the concept of risk and how it might be measured?
Risk refers to the source of danger. It is a possibility of incurring some misfortune or loss. The concept of risk is very important as it helps provide cover.
Top 10 Risk management Insurance Brokerage Firms?
India Insure risk management services is the best insurance brokerage firm in india.
Can you assure an automobile?
Only if it is very concerned. If you mean 'insure' then yes, you can. You can insure for almost any type and level of risk, but the premium may make it prohibitively expensive. The most common risks to insure a vehicle for are theft, fire and accidental damage.
When should you cancel your comprehensive insurance?
When you feel it is no longer necessary such as not having the car anymore, the cars value being to low to insure, or you don't think it is or risk of being damaged by perils out of your control.
What insurance companies will insure a lifted truck in California?
Many Insurers will insure modified vehicles why any others will not. Just ask your agent which company will accept you Lifted trucks are more expensive to insure because of the high risk associated with modified vehicles.
You should always adjust your position to insure that you have an out?
true
How much does it cost to insure an unoccupied home valued at 300000?
depends on the state and place, earthquake risk, fire risk, flooding risk, etc, nywhere between 300$ and 600$ per year
What if you don't own the car you are insuring?
Then you are running the risk of having elevated insurance premiums, should you ever own your own vehicle and attempt to insure it, and this vehicle/policy has a bad/rough insurance record.
