General insurance Features if an Insurable Loss Exposure

[Mataracy]

This features can be of different ways:
(1) Homogenous Exposure:
Thr items in an insurance pool, or the exposure limits needs to be similar so that a fair premium can be calculated. The fire damage done done to brick home will ordinarily be less than that suffered by wooden homes. So it would be unfair to combine them in the same insurance pool and change each insured the same premium rate based on the combined losses of the pool.

(2) The occurrence of loss must be fortuitous:
The losses suffered by the members of the pool must be accidental and beyond the control of the insured.
Intentional losses are against public policy. The self- inflicted losses would certainly cause insurance payments yo be higher than would otherwise be the case.
Thus for an insurance system to operate successfully, the losses it pays for must be accidental.
Non- accidental or expected reductions in economic value, such as depreciation or wear and tear, are expenses and should not be ensured.

(3) Losses must be definite,measurable and of sufficient severity to cause economic hardship:
This implies that the peril insured against must produce loss which can be quantified in money or material terms. Quantifiable or determinable losses constitute the basis of premium rating.

(4) The cost of insurance must be feasible or reasonable:
As otherwise this becomes so prohibitive that no one can pay the premium.

(5) This possible loss must not be catastrophic: ​

This is because catastrophes are difficult to predict and therefore not acceptable to insurance.​

 

[btaliat]

That's all true. There are some features of insurance that an intending insured must be awared of. You cannot be compensated for anu risk you intentionally called upon yourself. And I am very sure that insurance compensation must be in cossonance with the insurance policy. You can't be compensated if there is flood and you are under fire insurance.

 

[Mandy96]

I think I can relate with the number two on your list but I have some things in their I really can not understand, the part you wrote; the losses paid must be accidental for the insurance system to operate successfully. Please can you kindly shed more light on that part?

 

[uforwealth]

I think I can relate with the number two on your list but I have some things in their I really can not understand, the part you wrote; the losses paid must be accidental for the insurance system to operate successfully. Please can you kindly shed more light on that part?

I think what he meant by "the losses paid must be accidental" is that the losses experienced by the insured or policyholder must be by mistakes as against those deliberately caused by him or her. So, If insurance companies compensate the insured for every loss, either caused intentionally or accidentally, they won't gain and may eventually shut down permanently.