DEFINITION of 'Cumulative Exposure'

Exposure to a hazard over an extended period of time. Cumulative exposure may cause damages years after an individual was first exposed to the hazard, as the symptoms of injury may take a long period of time to manifest.

BREAKING DOWN 'Cumulative Exposure'

In most cases, damages or injuries are immediately apparent after an accident occurs. It is easy to see the damage caused to a house by a flood, or to a pedestrian who slips on an icy sidewalk. Insurance companies are able to easily identify what caused the injury and when the event occurred, and thus quickly resolve any insurance claim made by the injured party. In some cases, however, damages are accumulated over a period of time, and determining when the damages started and what caused them can be complicated.

For insurance companies, cumulative exposure may spread over multiple policies over a long period of time. This creates a protracted liability potential depending on the type of policy that the insurer has underwritten. Workers’ compensation policies, for example, are much more likely to have a high liability potential for cumulative exposure than other types of policies.

Examples of hazards that an individual may be continually exposed to and that may result in cumulative exposure claims include having to make continuous, repetitive motions. This may occur if a roofer has to bend over to install shingles for several hours a day over several months. An individual may also be exposed to loud noises for a prolonged period of time, and may eventually have permanent damage to his or her ears as a result. Baggage handlers at an airport may be exposed to this hazard if they have to load and unload baggage near airplane engines almost everyday.

One of the most widely-known cases of cumulative exposure involves asbestos, which was traditionally used in construction materials until it was discovered that it could cause mesothelioma. Construction workers who worked with asbestos could have been exposed to asbestos particles for a number of years, and only much later demonstrated symptoms of disease.

RELATED TERMS
  1. Exposure Trigger

    An event that causes a policyholder’s insurance coverage to kick ...
  2. Cumulative Return

    The aggregate amount that an investment has gained or lost over ...
  3. Continuous Injury Trigger

    An insurance policy coverage theory in which any policy that ...
  4. Contractors' All Risks (CAR) Insurance

    Contractors' all risks (CAR) insurance covers contractors for ...
  5. Manifestation Trigger

    An event that causes a policyholder’s personal injury or property ...
  6. Net Exposure

    The percentage difference between a hedge fund’s long and short ...
Related Articles
  1. Small Business

    Moral Hazards: A Bump In The Contract Road

    Learn how this phenomenon can cause a party in an agreement to behave differently than expected.
  2. Financial Advisor

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  3. Investing

    What is Cumulative Preferred Stock?

    Cumulative preferred stock is a type of stock that stipulates any skipped or omitted dividends must be paid to its holders before common shareholders can receive dividends.
  4. Managing Wealth

    The Most Expensive Home Insurance Perils

    Floods, hurricanes, mold, earthquakes - the threats to your home are numerous.
  5. Investing

    Fidelity Magellan Fund Performance Case Study (FMAGX)

    Discover the seasonal performance trends of the Fidelity Magellan Fund, and learn which periods are the best and worst times for investment.
  6. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  7. Insurance

    4 Common Misconceptions About Homeowners Insurance

    There are many misconceptions about homeowners insurance. These are the most common.
  8. Small Business

    Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
  9. Small Business

    Creating a Risk Management Plan for Your Small Business

    Learn how a complete risk management plan can minimize or eliminate your financial exposure through insurance and prevention solutions.
RELATED FAQS
  1. What is the difference between a peril and a hazard?

    Learn about the differences between a peril and a hazard and the different classifications of hazards - physical, moral and ... Read Answer >>
  2. What is the difference between moral hazard and morale hazard?

    Learn the difference between morale hazard and moral hazard, and discover how a person might experience each type of hazard ... Read Answer >>
  3. What are the most effective ways to reduce moral hazard?

    Discover when moral hazard occurs, what it means in different arenas, and effective tools for lenders, insurers, and employers ... Read Answer >>
  4. How does the Affordable Care Act affect moral hazard in the health insurance industry?

    Find out why the Affordable Care Act increases moral hazard in health insurance by pushing consumers farther and farther ... Read Answer >>
  5. What moral hazards are present with salaried employees?

    Discover that moral hazards are a common problem facing many companies today. The good news is that there are plenty of ways ... Read Answer >>
  6. Why do insurance policies have deductibles?

    Learn the basic concept of an insurance deductible and why they mitigate moral hazards and provide financial viability to ... Read Answer >>
Hot Definitions
  1. Debt/Equity Ratio

    The D/E ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders’ equity.
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
  3. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  4. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
  5. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  6. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
Trading Center