DEFINITION of 'Substandard Insurance'
An insurance policy issued to someone who does not qualify for a standard insurance rate. Substandard insurance policies may contain special or restricted provisions or higher premiums because the insured carries a greater risk, which increases the probability that the insurance company will incur a loss.
BREAKING DOWN 'Substandard Insurance'
Substandard insurance can be extended to a broad array of consumers, including those with poor driving records (car insurance) or with poor physical conditions (health insurance). It is important for those purchasing this type of insurance to pay close attention to any special or restrictive provision on the policy, since coverage extended by the insurance company may be more restricted due to the increase risk of providing coverage.