Non Insurable Risk

A non insurable risk is one for which insurance cannot be bought. There has to be certain reasons to be declared non-insurable.

Insurance answer
For a risk to be insurable it must fit the following:

  • The peril to be insured against must produce a definite loss which is not under the control of the insured.
  • There has to be a large number of homogeneous exposures subject to the same perils.
  • You must be able to calculate the loss and the cost of insurance must be economically feasible.
  • The peril must be unlikely to affect all insureds at the same time.
  • The loss produced by a risk must be able to be defined. It must have a potential to be financially serious.

This explains why a risk such as war in not insurable. At least some parts of a war risk are under control. There would not be a large number of similar exposures. How do you calculate the loss of war? How could the insurance be economically feasible? It would affect all the insureds at the same time. How do you define all the perils of war? You cannot.