In the world of insurance, we often hear the concept of "insurable risk". So, what kind of risk is considered insurable? This article will provide you with a detailed analysis of the conditions of insurable risks, and help you easily grasp the secret of risk protection!
1. The risk must be accidental
The first condition for an insurable risk is that the risk must be contingent and non-insurable. This means that the risk must have occurred as a result of an unexpected event or force majeure factor, and not an intentional or planned loss. For example, fire, traffic accidents, etc. are accidental risks, while vandalism or breach of contract are not insurable risks.
Second, the risk must be unexpected
In addition to contingency, insurable risks must also be accidental. This means that the risk must occur unexpectedly, not as expected. For example, illness, natural disasters, etc. are all unexpected risks. Some expected losses, such as natural wear and tear of machinery and equipment, are not insurable.
3. Risks must be objective
The third condition for insurable risk is that the risk must be objective and measurable. This means that the occurrence of risk and the loss caused by it must be measurable and assessable by objective criteria. Insurance companies need to be able to quantitatively analyze risks based on historical data, statistics and other information to determine insurance rates and payment standards.
Fourth, the risk cannot be a catastrophe risk
While it is an essential function for an insurance company to take on risk, not all risks can be underwritten. In particular, catastrophe risks with huge losses and wide impact, such as natural disasters such as ** and floods, often exceed the ability of insurance companies to underwrite. As a result, such risks usually need to be covered by the intervention of ** or international organizations.
Fifth, there must be a large number of homogeneous targets at risk
Finally, insurable risks also need to have a large number of homogeneous subject conditions. This means that risks must be universal, not individual. Only when there are a large number of identical or similar risk units can insurance companies carry out risk diversification and loss allocation through the law of large numbers, so as to achieve sound operation.
To sum up, insurable risks need to meet the conditions of chance, accidentality, objectivity, non-catastrophe, and the existence of a large number of homogeneous targets. Mastering these conditions will help us better understand and identify insurable risks, and provide more comprehensive and effective risk protection for ourselves and our families. Hopefully, this article will provide you with useful reference and guidance in the field of insurance!