Definition of "Assumption of risk"
Technique of risk management (better known as retention or self insurance) under which an individual or business firm assumes expected losses that are not catastrophic losses through the purchase of insurance. For example, a business firm assumes the risk of its employees being absent because of minor illness, but buys disability insurance to cover absences due to extended illness. Also refers to
- situations where insureds place themselves in situations that they realize pose a danger;
- the acceptance of risks by an insurance company.
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