Under what circumstance can the coverage of insurance policies be modified?

The circumstance under which the coverage of insurance policies can be modified relates to the classification of the risk that the applicant presents to the insurer. When an applicant is classified as a substandard risk, it signifies that they present a higher risk than the average insured. This higher level of risk may be due to various factors such as health issues, history of claims, or other elements that make them less desirable from an underwriting perspective. As a result, insurers often modify coverage terms or adjust premiums to reflect this increased risk level appropriately.

This approach allows insurance companies to remain viable while ensuring that they can cover potential losses associated with higher-risk policyholders. Insurers are equipped to offer customized insurance solutions in these cases, potentially providing reduced coverage, increased deductibles, or higher premiums to balance the risk involved. Thus, classifying the applicant as a substandard risk is a key factor prompting modifications to an insurance policy's coverage.