MAJOR PERSONAL RISKS AND COMMERCIAL RISKS

MAJOR PERSONAL RISKS AND COMMERCIAL RISKS

1. Personal Risks

   • Are risks that directly affect an indivi dual or family.
   • Insufficient income during retirement
     • The major risk associated with retirement is insufficient income.
     • The majority of workers in the United States retire before age 65.
   • Premature death
     • is defined as
       • the death of a family head
         • with unfulfilled financial obligations.
   • Poor health
     • Poor health is another major personal risk that can cause great economic insecurity.
     • The risk of poor health includes both the payment of catastrophic medical bills and the loss of earned income.
   • Unemployment
     • The risk of unemployment is another major threat to economic security.
     • Result from business cycle downswings, technological and structural changes in the economy, seasonal factors, imperfections in the labor market, and other causes as well.

2. Property Risks

   • Homes and other real estate and personal property can be damaged or destroyed because of fire, lightning, tornado, windstorm, and numerous other causes.
   • Direct Loss A direct loss is defined as a financial loss that results from the physical damage, destruction, or theft of the property.
   • Indirect or Consequential Loss An indirect loss is a financial loss that results indirectly from the occurrence of a direct physical damage or theft loss.

3. Liability Risks

   • are another important type of pure risk that most persons face.
   • First, there is no maximum upper limit with respect to the amount of the loss.
   • Second, a lien can be placed on your income and financial assets to satisfy a legal judgment.

4. Commercial Risks

   • Property Risks Business firms own valuable business property that can be damaged or destroyed by numerous perils, including fires, windstorms, tornadoes, hurricanes, earthquakes, and other perils.
   • Liability Risks Business firms today often operate in highly competitive markets where lawsuits for bodily injury and property damage are common.
   • Loss of Business Income Another important risk is the potential loss of business income when a covered physical damage loss occurs.
   • Other Risks Business firms must cope with a wide variety of additional risks, Crime exposures. These include robbery and burglary; shoplifting;