Retained or Accepted Risks

by Anna Glendenning | More from this Blogger

24 Apr 2006 11:33 AM

I have a friend who likes to climb mountains. I'm not motivated to climb a mountain, but some people are and enjoy doing so as often as possible. I could probably climb a mountain if I had to and I might try if I had no other choice, but for me at this point in my life I just don't want to take the risk of a broken leg or blisters on my hands. In fact, at this point in my life the risk of breaking my leg is much lower then a friend of mine who does climb mountains and that's fine with me.

My mountain climbing friend has decided to accept the risk of a broken leg, in order to enjoy the sport of mountain climbing. But, my friend has also made sure to keep a good medical insurance plan in place and long term disability just in case there is some kind of accident. She has also joined the local Life Flight program and pays an annual fee for emergency helicopter rides should she ever need it. The risks are something my friend is willing to accept and manage at the same time.

During the course of our lives we all have certain risks we are willing to accept. There were years when I drove a beat-up, older, fully paid for car. During those years, in order to save money on my auto insurance premiums, I was willing to accept the risk that I might crash my car. To save money I dropped my collision coverage. At that time in my life it was more important to keep the premiums low in order to save money for a car that wasn't an old beat-up clunker.

Today, I wouldn't want to drop my collision coverage completely but, I am willing to assume a larger amount of the repair bill if I back into a post or have an auto accident I am at fault for. I can afford to cover the costs if I cause an accident up to a certain amount and I don't need a collision deductible of $250.00 I can assume the responsibility of the first $500.00 for sure and if it really is my fault I can afford a collision deductible of the first $1,000.00.

During both of these stages in my life I have chosen certain levels of risk I am willing to assume or retain. At one point I assumed 100% of the risk of collision on an old car and today I assume the first $1,000.00 of a collision which is my fault. Both of these choices lowered my auto insurance premiums significantly and both choices were correct choices for my situation at the time.

One of the most important things families can do to manage their personal risk is identify what and how much you are willing and able to retain or assume in the event of the worst possible situation. In the next Blog of this series I will write about Reducing and Controlling Risks.

Related Blogs:

• Personal Risk Management
• Risk Management: Protecting Your Assets.
• What is "Risk?"
• Retained or Accepted Risks
• Controlling and Reducing Risks
• Eliminating Risks

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Learn more about Anna Glendenning

Anna Glendenning is a mother of four. Two biological children grown and out of college, and two siblings and adopted together in 2003. Anna's Personal Website http://www.adoptiveparentsnetwork.

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