In Insurance 101 – Property – Casualty Basics, the American Insurance Association writes:
Risk has two key dimensions- frequency and severity-and both help determine insurability. Frequency relates to how often a loss occurs, i.e., whether the risk/event is common or relatively rare. Severity relates to how costly losses resulting from that risk could be, i.e., whether they could be relatively inexpensive or truly catastrophic in nature. insurance can be an appropriate method of risk transfer for low-frequency, high-severity losses (e.g., house fires or tornadoes), as well as for high-frequency, low-severity losses (e.g., motor vehicle crashes). However, insurance may not be the most appropriate method for treating all risks facing individuals and businesses.
For example, insurance could be too expensive for certain risks (low-frequency, low-severity) or unavailable for other risks (such as high-frequency, high-severity risks, or risks whose frequency and/or severity is difficult to predict, such as terrorism). Additionally, insurance may be unable to fully compensate for a loss (e.g., the destruction of family photos, which have great emotional value but little financial value).
Insurance expert witnesses may opine regarding insurance loss claims and insurance policy coverage, among other topics.