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The insured risk

The insured risk is a risk, the level of admissible losses for which we will easily determine and therefore the insurance company is ready to compensate them.

Treat the insured risks:

  • Property risks – danger of emergence of losses from disaster which bring to: to real loss of property; to indirect loss of property.
  • Personal risks – danger of emergence of losses as a result: premature death; disability; old age.
  • The risks connected with legal responsibility – danger of emergence of losses because of: uses of the car; stay in the building; occupation; productions of goods; professional mistakes.

The insured risk which the insurance company is ready to undertake usually meets the following requirements:

  • The insured danger cannot be result of deliberate actions.
    It means that insurance companies do not pay for the damage intentionally caused by the most insured firm or natural person according to its instruction or from its permission. For example, the insurance policy from the fire does not join the losses caused by an arson of the insured firm. However such policy provides a covering of losses if the arson is made by the employee of firm.
  • Losses have to be subject to calculation, and insurance costs have to be economically justified.
    To get profit, insurance companies need to have data on frequency and gravity of the losses caused by this disaster. If this information covers a long time frame and is based on a large number of cases, quite precisely what losses will arise in the future usually can predict insurance companies.
  • One type of risk has to cover a significant amount of similar cases.
    Than more cases get to this category, especially it is probable that the future will confirm forecasts of insurance company. Therefore insurance companies undertake more willingly risks which many firms and individuals face. For example, the fire is the general danger which threatens practically all buildings therefore usually insurance of losses from the fire does not cause difficulties.
  • The risk should not affect at the same time all insured.
    If the insurance company does not cover big geographical zones or general population, then only one accident can lead to what she should pay according to all the policies at once.
  • Potential financial losses have to be notable for the insurer.
    The insurance company is not able to afford to be engaged in the office work connected with satisfaction sets of small insurance claims (statements of the insured persons for compensation of damage). Therefore many policies contain article providing that the insurance company will pay only that part of damage which exceeds the amount called in the policy. It is the so-called uninsurable balance which represents some part from the total amount of a loss which insured agrees to pay.