Risk is any situation that involves danger. We take risks everyday but we have adopted simple ways to manage without thinking too much about them. For example in our homes we lock the doors, install metal grills in the windows and doors to keep thieves out, but they still break in.
But if you are working hard, put money aside and investing to improve your life, then it makes sense to protect these things as best as you can.
In insurance terms, risk is the chance something harmful or unexpected could happen. This might involve the loss, theft, or damage of valuable property and belongings, or it may involve someone being injured.
Insurers assess the various risks by looking at the probability of the insured event occurring and how much it would cost to repair or replace. This assessment helps the insurer determine the premium amount to charge for insurance.
The general principle is, the higher the risk, the higher the premium. Therefore, if you put in measures to manage risk, it helps bring the premium amount down. Excess is also an element included in the insurance policy. Excess is an amount the insured pays as a way of carrying a small portion of the risk, and thus you pay a lower premium. You may also choose not to pay excess, this will translate to a larger premium since the full cost of the risk has been transferred to the insurer.
Indulging in risky behaviour may be excluded from some forms of insurance. For example, most medical insurers may not accept claims from bungee jumping or sky diving injuries. Motor insurers are unlikely to pay your claim if the driver of the vehicle was involved in an accident while driving under the influence of alcohol
