Engineering Approach

Published: | Updated: January 3, 2017

Definition - What does Engineering Approach mean?

The engineering approach is a way of analyzing risk in insurance by employing a professional engineer's expertise on an insurable item. The data produced by the engineer is then used for risk reduction and premium pricing.

Insuranceopedia explains Engineering Approach

When the owner of a commercial building insures their property, the insurance company might employ an engineer to inspect the property itself and study the possible risks in it. The engineer submits their evaluation to the company and this evaluation will serve as a basis for recommendation and the price of the premium. If the engineer thinks, for example, that the alarm system is substandard or some of the materials are vulnerable to fire, the insurance company might ask the insurance applicant to make the necessary changes to their property before the company issues them a policy.

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