Commercially Uninsurable Loss
What Does Commercially Uninsurable Loss Mean?
A commercially uninsurable loss is a loss that a commercial insurance company feels is too great to insure. Insuring such a loss is, in other words, too high a risk for the insurance company. Companies will have difficulty finding insurance that covers these losses.
Insuranceopedia Explains Commercially Uninsurable Loss
Insurance companies provide coverage for various risks. However, they have to make sure they turn a profit in order to continue paying out claims while still staying afloat. This means that some risks are too high for insurance companies to cover, since the likelihood of a heavy payout would threaten the insurance company's profits.
For example, if a bank were to display its cash holdings in a street-facing window instead of locked in a vault in the back, this would be a commercially uninsurable loss. The risk of the money being stolen would be far too high, and insurers would refuse to provide insurance for it.
In some cases, companies can improve their security and protection to reduce the likelihood of a loss. If it succeeds in reducing the risk, the loss could become insurable.
