What is meant by "calculable loss" in the context of insurance?

Calculable loss refers to losses that can be projected and quantified, which is crucial for the principles of insurance underwriting and risk assessment. Insurance operates on the premise that risks can be analyzed statistically, allowing insurers to determine potential losses and set premiums accordingly. This means that when a loss is calculable, it can be estimated in terms of financial impact, which aids insurers in managing their risk exposure and maintaining solvency.

Factors such as historical data, trends, and statistical models contribute to this calculation, ensuring that coverage can be tailored effectively to meet the needs of policyholders while also allowing insurance companies to operate sustainably. By understanding calculable losses, both insurers and insured parties can better navigate the complexities of risk and coverage in their contracts.