Risk
Definition
The chance of loss or the potential for a negative outcome. In insurance, risk is what the insurer evaluates when deciding whether and how to insure you. Risk factors include location, property type, claims history, construction materials, proximity to hazards, and many other variables specific to each coverage line.
When This Matters
A home built in a wildfire-prone area with a wood shake roof represents a high risk to the insurer, which may result in higher premiums, additional requirements, or non-renewal.
Related Terms
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