Meaning of insurable risks.
Risks are regarded as the part of the business and as such these are to be faced by the business. Some risks are shifted to specialized institutions like insurance company. Insurance company does provide insurance coverage to all types of risks. The risks which are covered under insurance coverage are called insurable risks.
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The risks can be insured when the following conditions exist:
- The object should be sufficient in number and quality so that the probable losses can be calculated.
- The element of uncertainty must be present at the time of occurrence of risks.
- The losses so occurred must be capable of determination and measurement.
- The losses so occurred must be accidental and unintentional in character.
- The party must have a real interest in avoiding the risks.
- The losses so incurred should be large that the insured cannot bear it himself.
- The loss should be definite and mathematically measurable.