Every business has its share of Risks – Trading and Pure. The latter is defined by one characteristic – should the risk take place, then there is only one outcome – event(s) leading to Financial Losses. The latter kind of losses, i.e. Pure Risks, are the ones that are covered by Insurers. Risks, Hazards, Perils, Losses and Consequential Losses – are common in any business, while running an enterprise. Welcome to the world of Property and Casualty Insurance where some of the commonly used terms in English have a slightly different meaning and connotation in the world of Insurance.
- Risks in the Insurance parlance are the properties that are insured.
- Hazard is the possibility and the probability of an event, accidental and unforeseen, taking place
- Perils are the causes of these events
- Losses are the financial damage that is caused and
- Consequential losses are the aftermath of the events that lead to loss of profits, increased cost of working