Uninsurable Risk

DEFINITION of 'Uninsurable Risk'

A hazard or condition that has either a high likelihood of loss, or in which the insurance would be considered against the law. Insurance companies limit their losses by not taking on certain risks that are very likely to soon result in a loss. Many states offer insurance for otherwise uninsurable risks through their "high-risk pools"; however, lifetime benefits may be capped and premiums may be expensive.

BREAKING DOWN 'Uninsurable Risk'

A terminally-ill person would be considered an uninsurable risk by most insurers. Since the likelihood of death or long-term care is greater, insurance companies would have too much to lose by providing coverage.