Uninsurable risk

Uninsurable risk is a situation in which no insurer is willing to provide coverage. The following are several situations that can give rise to uninsurable risk:

  • The amount of risk is too difficult to quantify
  • The cost of the insurance would be too great
  • Incidents causing losses are expected to be quite frequent
  • Providing coverage is illegal, such as reimbursing for an illegal act

When a risk is uninsurable, a company either restructures its business to avoid the risk or creates a reserve to cover any losses that may arise.

Related Courses

Business Insurance Fundamentals 
Enterprise Risk Management