Risk Class

What Does Risk Class Mean?

In insurance, a risk class is a group of companies or individuals that share certain characteristics. This grouping provides the insurance company with crucial information that aids in decision-making when approving policies.

Insuranceopedia Explains Risk Class

Insurance companies must determine whether covering certain individuals or companies will be financially viable. They categorize these individuals or companies into groups based on shared traits. For instance, individuals who smoke may pose a higher financial risk for health and life insurance coverage. Risk classes also help insurance companies assess the appropriate level of coverage required.