Substandard Group
What Does Substandard Group Mean?
A substandard group consists of individuals whom insurance companies consider riskier to insure compared to the average person. To account for the increased likelihood of filing insurance claims, these individuals are required to pay higher premiums for coverage.
Insuranceopedia Explains Substandard Group
Insurance companies classify applicants into groups based on their risk level, which determines the cost of coverage. A substandard group typically includes individuals deemed higher risk. For car insurance, this may include drivers with multiple accidents or traffic violations. Life and health insurance often includes individuals with pre-existing medical conditions that increase their risk of illness or death.
In addition to higher premiums, insurance companies may impose stricter coverage conditions for substandard groups. For example, a life insurance policy issued to someone who recently recovered from a severe illness might include a clause requiring the insured to survive a certain number of years before the policy becomes effective.
