At Risk

Q. I many of your posts and emails you refer to the amount “at risk”. What exactly do you mean?

A. Good question.

Professional risk managers look at two things in deciding if they have assets they want to insure, and how much insurance to buy.

For instance, you would never buy insurance for a lawn mower. The amount at risk if the lawn mower is stolen is around $300 . . . more if you have a riding mower.

But your car & house are worth much more. The amount at risk is in the hundreds of thousands (structure for the house; liability for the auto).

Similar philosophy applies to health insurance. The amount at risk for a doctor visit is usually $100 or less. The amount at risk for a serious accident, heart attack, stroke, cancer, etc. is much greater. Possibly in the hundreds of thousands.

In evaluating health insurance a risk manager would look at how much is at risk for a major claim and wouldn’t worry about the at risk portion for routine medical care.

Many policies limit your at risk on accidents to $150 or less while the amount at risk on most policies is $3,000 - $5,000. In some cases the amount at risk cannot be determined due to the limited benefit structure of the policies.

This entry was posted on July 20, 2006 at 2:17 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

| Print