explain insurable and non insurable risks?
Answers:
There are two types of insurable risks. The first are standard coverages such as homeowners insurance. The second are specialty insurances, called excess lines, that are things similar to a movie stars legs. It is very difficult to insure things close to that.
Non-insurable risks fall into a couple of category. The first and simplest are things which are not really risks. Risks are exposures to uncertainties. Some things are certain. That is why a robustness insurer will not cover a pre-existing condition. It is certain that you will hold claims related to the illness, and so it is not a risk.
The second non-insurable risk is a risk whose magnitude exceeds the size of insurers to bear the risk, an example of this is nuclear time of war. Most policies exclude coverage for nuclear attacks.
The third non-insurable risk is a risk that cannot be calculated, generally the example size is too small to estimate. Certain individual risks are so rare that it is impracticable to get a perfect estimate of the real incidence and hence a premium cannot be calculated.
Finally, there are risks that hold no data whatsoever. A apt and fraudulent example comes from a televangelist. He partnered with an insurance company to go "Rapture Insurance." Basically, you paid a premium and if Jesus did not nick you up to Heaven at the Second Coming, they paid you a million dollars. The insurance commission shut it down on the grounds that since it be impossible to estimate the date, it was impossible to divide a correct reserve for loss. Therefore, the contracts were against public policy. I must speak that was a unbelievably creative way out for the regulators too. The political firestorm the televangelists could own created if they had be attacked directly was completely avoided.
Other Answers:
I thought of starting "Catastrophic Meteor Insurance Co." The policies wages in the event of a Catastrophic Meteor crashing into the loam and wiping out adjectives life. This would be a great money inventor - very dignified margin business.
Source(s):
My imagination