What are the 8 types of Insurance risks?

There are many different types of risks that can come up in business. However, some risks are more likely to occur than others, and insurers need to understand the type of risk they’re insuring so they can craft an appropriate policy. Here’s a quick rundown of the eight most common types of insurance risks:

Insurable risks

The term “insurable risk” refers to any type of loss that can be insured. The other seven types of insurance risks are:

Uninsurable risks – These are not covered by any kind of insurance, and as such, there is no way to recover from them without causing significant economic harm. They include natural disasters like hurricanes and earthquakes; acts of terrorism; theft;

accidents caused by negligence or recklessness on behalf of an insured party; medical malpractice suits against doctors or hospitals (and other health care providers).

These kinds of losses are often referred to as “actuarial” losses because they depend on the probability that something bad will happen before it actually does happen.

Insurable but uninsurable – This type includes catastrophes like floods or earthquakes which may occur but whose severity cannot be predicted with high accuracy—and thus aren’t likely to result in enough money being collected through premiums paid by policyholders into funds set aside specifically for these kinds o

Non-insurable risks

Non-insurable risks are those that can’t be insured. The most common non-insurable risks include:

  • A natural disaster, such as a hurricane or flood
  • An act of terrorism
  • The death of a loved one

Catastrophic risks

Catastrophic risks are the most common form of insurance. They cover you in the event that a natural disaster or man-made disaster occurs, such as an earthquake, flood, or terrorist attack.

The first type of catastrophic risk is the risk of a natural disaster such as a flood or earthquake. The second type is the risk of fire or other property damage caused by arsonists or vandals who target your home because it’s easy to steal valuables inside (for example TVs).

Morale hazard

You know the feeling. You’re at work, and you start to feel like something is wrong with your team. Maybe it’s because they’re not working as hard or as well as they should be, or maybe they just seem more tired than usual.

Whatever the case may be, morale is a big deal—and when it starts to go down in your office environment, then you’ve got a morale hazard on your hands!  But what exactly does this mean? Morale hazard refers to how employees feel about their job and themselves within an organization (or company).

In other words: Are people happy? Do they enjoy coming to work every day? Or are there signs that morale has started declining due to changes in leadership or policies?

Pure risk

Pure risk is a type of risk that has no control. Examples include fire, flood, and earthquake. There are 3 ways to insure against pure risks:

  • Controllable- Insurable under their own terms and conditions (e.g., fire insurance) or through reinsurance agreements with an insurer who has sufficient capital to cover any claims arising from such events;


  • Non-Controllable – Uninsurable because there is no way for an insurer to predict what will happen and thus avoid paying out on future losses;


  • Insurmountable – A situation where it would be impossible for an insurer to recover its costs from those responsible for causing the damage, usually because they have no assets or may be wealthy enough not even attempt recovery through lawsuits, etc.;


Speculative risk

Speculative risks are those that are difficult to predict and may be completely out of your control. Examples include weather conditions, natural disasters, and earthquakes. These risks are not insurable because they’re too unpredictable, so you can’t get insurance on them.

In contrast, non-insurance risk comes from events that aren’t predictable or preventable by an insured party—for example, fire damage caused by arson or vandalism; theft from your home; or damage caused by hail storms (which is also known as hail damage).

Understanding the types of insurance risk will help you evaluate your needs

Determine how much insurance to buy. Insurance is a way to protect yourself from financial loss. The types of insurance risk are:

Insurable – This type of risk is covered by an insurer who agrees to pay for all or part of the loss. For example, if you have car insurance on a vehicle that gets stolen, the insurer will cover any damages done by thieves if they steal your car and then crash it into something else.

Or cause other damage while driving it around town with no one else in control at all times except for whoever owns/drives said vehicle at any given moment during their shift (including weekends).

Non-Insurable – This type of risk does not fall under any kind of coverage whatsoever because there’s no way anyone could expect themselves never to be able to afford such exorbitant amounts needed just so someone else doesn’t get hurt accidentally after something goes wrong with the said object itself!


The key takeaway from this article is that insurance is a way to protect yourself and your family from certain risks. Insurance is an important tool for determining the amount of coverage you need for different risks, but it’s also important to understand what types of insurance are available and which kind will best suit your needs.

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