What Does Adverse Selection Mean?

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What does Adverse Selection mean? Read on to discover the definition & meaning of the term Adverse Selection - to help you better understand the language used in insurance policies.

Adverse Selection

Adverse Selection

Adverse selection, in the context of insurance, occurs when an insurance company accepts only applicants who they believe will incur a low probability of loss. Consequently, there is adverse selection when buyers become more eager to purchase an insurance policy in the belief that they highly need to make a claim.

We hope the you have a better understanding of the meaning of Adverse Selection.

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