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.

RELATED TERMS
  1. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  2. Uninsurable Peril

    Events or situations that insurance coverage is not available ...
  3. Life Insurance

    A protection against the loss of income that would result if ...
  4. Classified Insurance

    Insurance coverage provided to a policyholder that is considered ...
  5. Insurable Interest

    An economic stake in an event for which an insurance policy is ...
  6. Insurance

    A contract (policy) in which an individual or entity receives ...
Related Articles
  1. Investing

    Elements of Insurable Risks: A Quick Guide

    Explore the elements of insurable risk: due to chance, measurable and definite, predictability, noncatastrophic, random selection and large loss exposure.
  2. Insurance

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  3. Investing

    Methods of Handling Risk: A Quick Guide

    Discover the five methods to manage pure risk, and learn how they can be implemented to mitigate risk with health and life insurance.
  4. Insurance

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  5. Insurance

    12 Insurance Questions for High Net Worth Families

    High net worth families should ask themselves these 12 questions regarding comprehensive insurance.
  6. Insurance

    4 Things That Keep You From Getting Life Insurance

    We look at four common reasons people give for not applying for life insurance, and see if they're legitimate.
RELATED FAQS
  1. What do insurance companies qualify as hazardous activity?

    Learn about activities that insurance companies classify as hazardous, and the effects this has on individuals seeking insurance ... Read Answer >>
  2. Can my insurance company refuse me coverage?

    Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal ... Read Answer >>
  3. What is the main business model for insurance companies?

    Read about the most important components of an insurance company business model, such as risk pricing, float investing and ... Read Answer >>
  4. In what ways does government regulation impact the insurance sector?

    See how government regulation of the insurance sector leads to higher prices, more risk and a system where the consumer has ... Read Answer >>
  5. How does adverse selection affect insurance premiums?

    Find out what causes adverse selection in the insurance market and why it drives up premiums for all policyholders. Read Answer >>
Hot Definitions
  1. Salvage Value

    The estimated value that an asset will realize upon its sale at the end of its useful life. The value is used in accounting ...
  2. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  3. Promissory Note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on ...
  4. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Absolute Advantage

    The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost ...
Trading Center