Definition - What does Non-insurable Risk mean?
A non-insurable risk is a risk an insurance company deems too hazardous or financially impractical to take on. It can also refer to risks that are illegal for an insurance company to assume. By not taking them on, insurers can curb losses, as non-insurable risks usually have extremely high probabilities of loss for the insurance company.
A non-insurable risk is also known as an uninsurable risk.
Insuranceopedia explains Non-insurable Risk
Insurance companies decline to take on non-insurable risks because they know they will almost certainly lose money very quickly if they do. In other words, assuming risk with such a high probability of loss is bad business.
For example, a life insurance company may deem a person who is 70 years old and has lung cancer a non-insurable risk because the likelihood of their death before the policy becomes profitable is simply too high.
Sometimes, states provide certain types of insurance for non-insurable risks through "high-risk pools;" however, the premiums are often very high and provide very limited coverage.