What Does Substandard Group Mean?
A substandard group is made of up individuals whom insurance companies deem riskier to insure than the average person. They have to pay more for coverage to offset the higher chance that they would file an insurance claim.
Insuranceopedia Explains Substandard Group
Insurance companies divide applicants into different groups based on their level of risk. These groups determine the price an applicant would pay if they sign up for coverage. Most establish some sort of substandard group for pricing. For car insurance, it could include drivers who have had multiple accidents or traffic violations. For life and health insurance, it may encompass individuals with pre-existing medical conditions, which increase their chances of getting sick or dying.
Insurance companies may also include more restrictions on coverage they offer to individuals in a substandard group. For example, a life insurance company might sell a substandard policy to someone who just recovered from a serious illness, but with the condition that the insured must live a minimum number of years for the policy to come into effect.