What is the definition of Substandard Risk Class?
Substandard Risk Class refers to a group of insurance applicants that are characterized by a considerably greater-than-average possibility of loss.
The insurance company's underwriter upon receiving the application for insurance will evaluate what kind of risks the applicant represents. The underwriter will check for permanent medical conditions that have existed prior to the application, whether the applicant has been injured in an accident or suffered from a serious illness, or is involved in what is considered as a dangerous occupation. These, as well as the applicant's health history, moral hazards and other factors, contributed to the applicant's being, are included in the substandard risk class. Those under this class are charged a higher premium because of the greater risk they represent.
This class is also called an impaired risk class and a special class.
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