Insurance Term of the Day: Exposure

In the insurance world, exposure means more than the result of your fly being down, or the plumber working on your pipes. Exposure relates to your potential risk thatโ€™ll cause a loss which requires filing a claim.

Insurance companies will measure your exposure based on numerous factors. These factors play a role in the final premium. These exposures put you at risk for a loss. If your risk is too high, insurance companies could deny coverage.

To get a better understanding of exposure, here are a few examples:

  • Living in an area with more traffic and car accidents
  • Driving around frequently

These factors help to determine the odds that you will have a claim. Insurance companies are hesitant to insure someone who may end up costing them a boat load of money because it can affect their businessโ€™s profits.

If you ever hear this term from an insurance company, ask them what your exposures are and see if thereโ€™s anything you can do to change it to decrease your rates.


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