Fashion Design Competition For High School Students In India Insurable and Non-Insurable Risks

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Insurable and Non-Insurable Risks

When we talk about insurance, we are referring to all forms of risk. So getting insurance is just a way of sharing our risk with others who have similar risks.

However, some risks can be insured (i.e. insurable risks), while some risks by their nature cannot be insured (i.e. uninsured risks).

Insured risk

Insurable risk is the type of risk for which an insurer makes provisions or insures. This is because it is possible to collect, calculate and estimate expected future losses. Insurance risk has previous statistics that are used as a basis for estimating insurance premiums. It offers loss prospects, but no profits. Predict and measure risks for auto insurance, marine insurance, life insurance, and more.

This type of risk is one whose probability of occurrence can be inferred from the available information about the frequency of similar occurrences in the past. Examples of what insurance risk is described:

Example 1: The likelihood (chance) of a particular vehicle being involved in an accident in 2011 (out of all vehicles insured in 2011) can be determined from the number of vehicles involved in an accident each previous year ( of all vehicles insured in those years).

Example 2: The probability (or likelihood) that a man (or woman) of a particular age will definitely die in that year can be estimated by the proportion of people of that age who died in the previous years.

Uninsured risk

Uninsured risk is the type of risk that insurers are not prepared to insure simply because the likelihood of future losses cannot be estimated and calculated. It holds an outlook for profits as well as losses. Risk cannot be predicted and measured.

Example 1: The likelihood that demand for a product will decline next year due to changing consumer preferences is difficult to estimate as the necessary prior statistics for that product may not be available.

Example 2: Current manufacturing techniques may become obsolete or obsolete by next year as a result of technological advances.

Other examples of uninsured risks are:

1. God’s work: All risks associated with natural disasters called force majeure

of.earthquake

b. War

c. Flood

It should be noted that buildings, property or life lost during the occurrence of a natural disaster (listed above), although insured, will not be covered by the insurance company. This non-insurance coverage has also been extended to matters related to radioactive contamination.

2. gambling: We cannot guarantee the odds of losing a gambling game.

3. Lost profits due to competition: We cannot guarantee the odds of winning or losing a contest.

Four. New product launch: Manufacturers who launch new products cannot guarantee the likelihood of acceptance of new products as they have not been tested in the market.

Five. Losses resulting from bad/inefficient management: The ability to successfully manage an organization depends on many factors and profit/loss depends on the judicious use of these factors. One of them is the ability to manage effectively. Anticipated loss of tissue as a result of inefficiency cannot be guaranteed.

6. Poor business location: People with bad locations should know that their odds of success are low. Insuring such a business is a surefire way to fool insurance companies.

7. Lost profits due to reduced demand: Product demand changes with time and other factors. Insurers do not insure based on expected losses due to reduced demand.

8. Speculation: This is an involvement in a venture that offers the potential for considerable profit, but with the potential for loss. We expect to profit from the decline, but there is a possibility of loss. This is considered an uninsured risk and cannot be insured.

9. Opening new shops/offices: Opening a new shop is considered an uninsured risk. I don’t know what to expect from running a new shop. It is illogical to accept that an insurance company insures a new store for you.

Ten. Changes in fashion: Fashion is an unpredictable trend. Anticipated fashion changes cannot be guaranteed. A fashion house cannot insure its components as they can become obsolete at any time.

11. Driving Violation: You cannot obtain an insurance policy against possible fines for offenses committed while driving.

However, it should be noted that there is no clear distinction between insured and uninsured risks. In theory, insurance companies should be ready to insure anything if high enough premiums are paid. Nevertheless, this distinction serves practical purposes.

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