Risk Classification

Published: | Updated: January 9, 2018

Definition - What does Risk Classification mean?

Risk classification is the practice of grouping people together according to the risks they present, including similarities in costs for potential losses or damages, how frequently the risks occur, and whether steps are taken to reduce or eliminate the risks.

Insuranceopedia explains Risk Classification

Certain industries classify risks as low, medium, and high. Insurance companies group them using the labels standard, substandard, and preferred. Whatever the grouping, the members of the group share the same characteristics. They may share the same cost for a loss or they may share the same way of eliminating or reducing them. Insurers can offer credits for insurable subjects that present lower risks.


How Well Do You Know Your Life Insurance?

The more you know about life insurance, the better prepared you are to find the best coverage for you.

Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.

Share this:

Connect with us

Email Newsletter

Join thousands receiving the latest content and insights on the insurance industry.