Insurance Terms Defined: Noninsurance Transfer

Noninsurance Transfer: a risk management technique by which the risk of loss is transferred to a person or organization that is not an insurer.

The transfer of risk to an insurer is the most common risk transfer you will see, but it is possible to transfer risk to someone else.  A noninsurance transfer is what happens in this situation, when a business decides to eliminate a practice or policy and transfer the risk to someone else.

For instance, say you own a pizza restaurant and your employees deliver the pizza for you and you pay insurance for their deliveries.  You decide this is too expensive and you decide to contract with an outside specialized delivery company that delivers for you and pays their own insurance.  You now pay for the service, eliminate the risk of liability or collision coverage and transfer your risk.