Catastrophe Hazard

DEFINITION of 'Catastrophe Hazard'

The risk of loss from a particularly destructive event, such as a hurricane, flood or terrorist attack. Catastrophe hazard represents a particularly large risk to insurers because of the overwhelming number of claims filed at once in the aftermath of a highly destructive event.

BREAKING DOWN 'Catastrophe Hazard'

To protect themselves against catastrophe hazard, some insurers do not provide coverage against catastrophes. In these cases, people who want insurance against acts of God, war and terror must purchase separate catastrophe insurance policies.