Avoidance Of Risk

Avoidance of a risk is when you take steps to remove a hazard or engage in a different activity, or otherwise end a specific exposure. You can do this by choosing not to own an asset or to engage in activities that give rise to the possibility of having a claim.

It is impossible to completely avoid all risk so if the consequence of loss is drastic enough, you purchase insurance.

Examples of avoidance of risk would include not driving a car so you do not have the risk of liability for an at-fault accident. A manufacturer could choose not to introduce a new product due to concern that it may cause injury to customers. It is obvious that this is usually not a practical answer for most situations.

Talk to your agent or broker about recommendations to loss prevention. Often you can work with your insurance company underwriter and/or broker to reduce your exposure to loss. This may help to reduce your premiums. Certainly being claims-free means a higher profitability.