Exposure is defined as the gauge of vulnerability to damage or loss. It is usually expressed in units or dollars. In some definitions, exposure is considered as the prospect of loss. The most cost able process in order to purchase insurance is to include in the coverage the unexpected loss with a low chance of occurrence. Covering a loss with soaring chance of occurrence would only mean swapping of dollars with another insurance company, since the premium being charged will reflect the anticipated chance of loss. The profit and expense loadings will also be an additional fraction by the person insuring the same.
In terms of exposure base, exposure is one of the basis on which the rates are being applied in order to determine the premium. Truly, exposures can be measured by means of payroll, as in general liability or in worker’s compensation, sales, receipts, area or man hours, square footage, for general liability, or as per unit in automobile, or per one thousand dollars ($1,000) of value as in property insurance.
Exposure being related in terms of self-insurance protects from loss by means of setting aside an individual’s own funds. This system may be done on mathematical basis in establishing a single fund wherein such funds are being deposited through periodic basis. By self insurance, it is very possible to safeguard against high frequency and low severity losses. To do this by way of an insurance company will mean containing to pay out a premium which include the loadings for a particular insurance company’s general expenditures, and the cost of placing the policy on the acquisition expenses, books, contingencies and premium taxes.
One can also minimize or lessen the exposure on risk for his business by way of managing and at the same time obtaining an adequate insurance coverage for such exposure.
Accidents and injuries will happen and each company is suffering a mishap at various points. While loss control is an important way to lessen the risks, the impression of programming fault or other errors may be controlled by way of careful planning.
It is even suggested that one may try to put off losses and prevent the extent of losses that occurs. An implementing disaster recovery programs can offer a smooth sailing recovery in the event of failures and system outages that surely result to business interruption.
If a technology firm performs services for different clients, it is anticipated that an insurance aspirant will want to shift the obligation for risk to his vendors, customers and even subcontractors. It is significant to note that all the jobs that one is doing will be specified in a policy contract and should also be reviewed by a legal counsel. It is because no matter how cautious one person may become in the presentation of a contract, an individual may experience some disagreements that will result in the adequate need for an insurance protection.
So if a person is already aware of his own loss exposures and has taken economic steps to reduce them, he must also avail of more insurance to transfer obligation for losses into his insurer wherein it will minimize the risk in his business.