Special Risk Insurance

What Does Special Risk Insurance Mean?

Special risk insurance refers to an insurance policy that is non-traditional or unusual because the person or entity insured is more exposed to certain risks. These unusual risks might be attributed to the dangerous nature of the insured’s profession or industry.

Insuranceopedia Explains Special Risk Insurance

Insurance companies cover risks like death, sickness, and property damage. But when an individual or an organization comes into close contact with these risks on a regular basis, they might require special risk insurance.

A professional boxer, for example, is likely to suffer bodily damage sooner and more frequently than an office worker. While traditional life or health insurance will be suitable for the latter, the boxer will require a special risk insurance. For workers whose jobs carry a real chance of injury, disability insurance is often bought alongside a special risk policy, since it replaces income if the person can no longer do the job. Businesses operating in hazardous industries typically arrange their special risk coverage on top of standard business insurance, because general commercial policies usually exclude the higher-risk activities involved.

Because of the higher likelihood and frequency of claims, premiums for special risk insurance are more expensive. Underwriters look at many of the same factors that determine the cost of a life insurance premium, but the unusual risk exposure pushes the numbers higher.