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, 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.