Physical Hazard

Physical Hazard Hazard is a condition or situation that increases the chance of loss in an insured risk. Physical Hazards are physical conditions that increase the possibility of a loss. They indicate the dangers of the subject of insurance which can be identified by inspection of the risk. For example: fire, burglary, liability. Physical hazard relates to the subject-matter of insurance. It can be seen, assessed and rated. It can be dealt with by applying excesses, loading premium, cover exclusions or other conditions. The hazards are apparent in the subject- matter itself. The dangers are visible from the very nature, construction and situation of the subject-matter. Insurance companies needs to have detailed knowledge of the physical Hazard while underwriting the policy and decides whether to accept the policy or not. This helps them to determine the insurance terms, rates, nature, premium, and other conditions for the policy. Physical hazards are taken into account by underwriters for one very important reason: because insurance is all about fairness, about equity. If a risk with poor physical hazard is given the same policy, at the same price, as someone with a good risk profile, it isn't fair. The practice of underwriting acts as a very efficient way to make risks equal. You present more or a risk, you pay more or you accept different terms and conditions that reflect the bigger risk you pose. If you present less of a risk, you pay less or don't have terms and conditions applied. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful