Risk is a crucial part of insurance, affecting the cost of insurance premiums. The amount you pay for insurance depends on the level of risk involved, as well as other factors like what is being insured and for how long. If the risk changes during your insurance period, your premium will likely change too. In simple terms, risk is the chance of something bad happening that could cost you money. In insurance contracts, risk is a key element that both the insurer and the insured must consider.