Commercially Uninsurable Loss
What Does Commercially Uninsurable Loss Mean?
A commercially uninsurable loss is a loss that a commercial insurance company deems too high a risk to insure. In other words, the potential financial impact of such a loss is considered too great for the insurance company to cover. As a result, companies may struggle to find insurance that protects against these types of losses.
Insuranceopedia Explains Commercially Uninsurable Loss
Insurance companies provide coverage for various risks, but they must ensure profitability to continue paying out claims while staying financially stable. As a result, some risks are considered too high for insurers to cover, as the potential for significant payouts could jeopardize the company’s profits.
For example, if a bank were to display its cash holdings in a street-facing window rather than securely locking them in a vault, this would represent a commercially uninsurable loss. The risk of theft would be too great, and insurers would likely refuse to provide coverage.
In some cases, companies can enhance their security measures to reduce the likelihood of a loss. If successful in lowering the risk, the loss may become insurable.