What does Risk Tolerance mean? Read on to discover the definition & meaning of the term Risk Tolerance - to help you better understand the language used in insurance policies.
The willingness of an organization to incur risk to gain future reward. In insurance, risk tolerance may be evidenced by a willingness of the insured to increase deductibles or self-insured retentions (SIRs). Alternative risk transfer is used by insureds with low risk tolerance and the corresponding desire to reduce the uncertainty arising from purchase of commercial insurance. Compare to Retention Ability.
More Insurance Terms And Definitions
The Merriam-Webster Dictionary defines insurance as:
b: Coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.
c: The sum for which something is insured.
We hope the you have a better understanding of the meaning of Risk Tolerance. If you are looking for the meanings of other important insurance terms and their definitions, just click on the letter below to find the words & concepts you are looking for: