What is considered unfair discrimination in insurance?

Unfair discrimination in insurance occurs when a company treats applicants or policyholders unequally based on specific characteristics that are not relevant to their risk profile. The correct answer highlights an essential principle in insurance regulation, where refusal of coverage based on marital status or race is considered discriminatory and unjust.

Insurance practices must be fair and equitable; rejecting applicants solely based on these personal characteristics perpetuates inequality and does not reflect the actual risk that they pose. It is important for insurers to base underwriting decisions on relevant metrics that correlate with insurable risk rather than attributes that are unrelated to an individual's likelihood of filing a claim. This is central to anti-discrimination laws that govern the insurance industry, ensuring that all individuals have fair access to insurance products without being judged or penalized for their race, marital status, or other similar characteristics.

In contrast, other options may represent scenarios where certain conditions affecting risk may be assessed, such as health status or geographical location. However, these factors can sometimes be justified based on their connection to actual risk profiles. Therefore, they do not fall under the same category of unfair discrimination as rejecting coverage based on immutable characteristics.