Catastrophe Loss
What Does Catastrophe Loss Mean?
A catastrophe loss refers to a type of loss that is extremely severe and unpredictable. In other words, it has a devastating impact and cannot be anticipated. As a result, it is very challenging to prepare for such events without insurance. Catastrophe insurance is designed to protect individuals and businesses from suffering significant financial losses in the event of a major disaster.
Insuranceopedia Explains Catastrophe Loss
Many general hazard insurance policies do not provide coverage for catastrophes such as earthquakes, sudden loss of life, volcanic eruptions, and avalanches. This is primarily because the likelihood of these events occurring to the average person is low, while the potential costs can be extremely high. However, when these disasters do occur, they can result in significant physical and financial destruction. Therefore, catastrophe insurance is designed to financially protect individuals living in high-risk areas from disasters such as avalanches, earthquakes, or tornadoes.
