Legal Definitions - shifting risk

Definition: Shifting risk refers to the transfer of potential loss or harm from one party to another through insurance or other means.

For example, a business may purchase insurance to shift the risk of property damage or liability to the insurance company. In this case, the business pays a premium to the insurance company in exchange for the company assuming the risk of potential losses.

Another example of shifting risk is when a homeowner hires a contractor to perform renovations on their property. The homeowner may require the contractor to carry liability insurance to shift the risk of any damages or injuries that may occur during the renovation process from the homeowner to the contractor.

Shifting risk is a common practice in many industries and can help protect individuals and businesses from potential financial losses.