What does ‘risk’ mean?
When we talk about risk we are talking about the chances of an incident occurring that will cause damage or loss. All insurance companies calculate risk to determine a customer’s premium. It’s putting a financial value on the risk.
When we assess and price risk, we are working out how much it would cost to replace and/or rebuild the insured item and the likelihood that this will occur in a period of insurance (1 year). For example, if you have a low-lying, single story house on a waterway your property could be considered a high flood risk. If you’re an inexperienced driver, you are at a high risk of being involved in an incident. While we take into account many other factors, both of these scenarios could result in a higher premium or additional excess.
When we assess and price risk, we are working out how much it would cost to replace and/or rebuild the insured item and the likelihood that this will occur in a period of insurance (1 year). For example, if you have a low-lying, single story house on a waterway your property could be considered a high flood risk. If you’re an inexperienced driver, you are at a high risk of being involved in an incident. While we take into account many other factors, both of these scenarios could result in a higher premium or additional excess.