Before discussing Examples Of Physical Hazards in insurance, let us see what does Hazard in insurance mean. Hazards generally indicate the bad elements in a risk proposed. So, a detailed knowledge thereof can only influence the decision of a prudent underwriter in deciding whether to accept or reject a risk. If to accept the risk, at what rates, terms, premiums and conditions etc. The hazards are visible from the very nature, construction and situation of the subject-matter.
Some Examples Of Physical Hazards In various branches of insurance (such as life, marine, fire, accident) will make the position of hazards further clear.
Examples Of Physical Hazards In Insurance:
Physical Hazard In Marine Insurance:
- The nature of the cargo, whether these are more susceptible to damage, e.g., fragile nature of the cargo like, fish, egg etc. or glass items which are more prone to breakage.
- Quality of packing of the goods. Bad quality packing creates more losses.
- Voyage itself may be hazardous particularly during monsoon period in a country.
- The nature, construction, age, classification and condition of a vessel. For example, an over-aged vessel or a vessel in a bad shape or a vessel in an un-seaworthy condition presents higher risks and is more affiliated to accidents.
Physical Hazards In Fire Insurance:
- Nature and construction of the building. Materials used in the construction and whether such materials are of combustible or non-combustible nature.
- The system of lighting and heating of the premises. Whether the electrical wiring are in good shape or worn-out.
- Whether the premises are kept clear. Rubbishes scattered here and there help fire to spread.
- Indiscriminate smoking throughout the premises, particularly if it is a factory where inflammable materials are required to be kept, is in itself an example of physical hazard.
- Whether the risk is situated near fire brigade, and whether internal fire fighting facilities are there within the premises.
- Nature of occupation of the premises, e.g., if it is a petroleum or kerosene or chemical trade the hazard will be more.
- Nature, construction, occupation of the adjoining premises because fire may travel from the adjoining premises to the insured premises.
Physical Hazards In Life Insurance:
- Age and condition of health of the proposer.
- Family history of any hereditary disease, e. g., cancer, tuberculosis, blood pressure, heart disease etc.
- History of any illness of the proposer.
- The occupation of the proposer, for example, publicans, factory workers, mine workers etc. are more hazardous from life insurance point of view.
Physical Hazards In Accident Insurance
Accident Examples will vary depending on the type of insurance.
- In motor insurance, the age, make, condition previous accidents, are all examples of physical hazards.
- In burglary insurance, the construction of the house, condition of doors and windows, existence or otherwise of burglar alarms, nature of contents, reputation or otherwise of the area are all examples of physical hazards.
- In personal accident insurance, physical hazard relates to age, occupation, health, and physical condition etc, of the proposer.
- In liability insurance, the nature, construction, occupation of the premises and history of past liability are all instances of physical hazards.
- In property insurance, the concept follows the pattern of fire insurance.