You Cannot Insure Every Risk under The Sun
The 21st century has witnessed some umpteen unconventional insurances. Every risk is insurable inasmuch as the premium can be paid. In other words, when the price is right, it can be sold. Taylor Swift’s legs are reportedly worth $40 million; Jennifer Lopez’s posterior is worth $27 Million. The list is endless. Celebrities often times insure certain parts of their bodies with hefty sum insureds.
Contingency Insurance, which by definition refers to insurance that defy classical categorization, also insures exceptional activities like event cancellation for sporting activities, entertainment, film production, trade shows, etc. Certain risks, however, are considered by insurance companies to be grey areas, and would rather not be quick to insure. These include the following:
Insurers cover risks with uncertain losses and without any possibility of gain. Any risk that has possibility of gain is considered a speculative risk and is not insurable. Examples of speculative risks include trading risks, gambling, marketing and hedging.
Some risks, as and when they do occur, are outside the purview of insurance. They are sometimes considered as Acts of God! These types of risk affect a large group of people at a particular point in time. Examples of such perils are hurricane, tsunami and earth quake. This is because some insurers consider such perils to be catastrophic in nature, placing such risks at the mercy of government interventions. Some jurisdictions (West Africa and other countries) however, cover these exceptions as either standard or a buy-back option.
No Insurable Interest
An insured can only insure items that they have financial or insurable interest in. Insurers avoid risk if the insured has no interest in the property/ subject of insurance. X therefore cannot insure Y unless in very limited circumstances; marriage, employment, nuclear family relations and some pecuniary contracts. In the 18th century, citizens used to gamble on the lives of celebrities and the life of the King. These acts lead to some infamous atrocities. A famous law was passed during that era to make lack of financial interest in a contract a mere wager.
Other Non-Financial Risks:
The majority of us would have wished we could actually insure against the choice of a future partner or career. Well, it is not feasible. The outcomes of such decisions cannot be quantifiable in monetary terms, thus no real insurable risk.
In the light of the above provisions, all other assets, earnings and liabilities are adequately insurable by insurance companies. These ranges from home contents, buildings, stock-in trade, employee protection, accidents, marine, travels, education, etc.
Contact : Michael Adomako, ACII [email protected]
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