Risk of investment losses from operations and casualties and insurance coverage decisions

ABSTRACT

Family business firms, like other firms, face internal and external risks such as accidents, errors, omissions, fire, unexpected casualties, natural disasters, the COVID-19 pandemic, etc., that can lead to investment losses. This study aimed to investigate the impact of the perceived risk of investment losses from operations (RISK_ILFO) and the perceived risk of investment losses from casualties (RISK_ILFC) on the commercial insurance coverage (CIC) decision of family business owners in India. This study utilized a survey research design to collect data from the owners of micro, small, and medium-sized family business firms located in India. The research participants were asked about their perceptions of the impact of RISK ILFO and RISKILFC on CIC. Findings show that perceived RISK_ILFO and RISK_ILFC positively impact CIC decision of family business owners. The results also show that the impact of perceived RISK_ILFO on CIC is higher than the impact of perceived RISK_ILFC on CIC. This study contributes to the literature on the relationship between the risk of investment losses and insurance coverage decisions. Insurance planners may find results useful to provide suggestions to family business owners on commercial insurance coverage. Research scholars may find empirical results useful to develop further studies in risk management and insurance areas. Family business owners may find the results useful to mitigate the risk of investment losses.