What does "assessable risk" mean?

"Assessable risk" refers to a risk that is clearly understood and can be evaluated for insurability. This means that relevant data and information are available to make an informed judgment about the likelihood and potential cost of claims associated with the risk. Insurers need to be able to quantify risks to determine premium rates and coverage terms effectively; hence, understanding and evaluating the risk is crucial for underwriting decisions.

In the context of insurance, an assessable risk allows insurers to apply rating methodologies and develop appropriate policies, ensuring that they can operate profitably while providing coverage to policyholders. By contrast, a risk that cannot be measured lacks the necessary data for evaluation and would typically be viewed as uninsurable. Thus, the ability to assess is what distinguishes an assessable risk in the insurance landscape.