What does Preferred Risk mean? Read on to discover the definition & meaning of the term Preferred Risk - to help you better understand the language used in insurance policies.
A preferred risk is a policyholder who is considered significantly less likely to file claims. Therefore, insurance companies prefer it over a standard or higher risk because the former represent a better chance to make more profit. For the insurer, fewer claims equates to more money taken in and less money paid out.
We hope the you have a better understanding of the meaning of Preferred Risk.