Short-term insurance exists to provide temporary coverage, so the insurers want low-risk policyholders. Since they cannot rely on long-term revenue from premiums with short-term policies, they want to ensure that they will potentially pay out on as few policies as possible. For example, a short-term health insurance plan may be perfect for someone traveling for a month or two who is in good health but may require a visit to the doctor for a minor illness or injury. Short-term insurance would not be a financially sound arrangement for an individual with a preexisting or severe medical condition requiring extensive treatment, so such applicants typically won't qualify for short-term insurance.
Since short-term insurers want to keep risk low, policies are generally very strict and have very specific disclaimers for what a policy does and does not cover. If a claim falls in a gray area, it wouldn’t be unexpected for the insurer to deny the claim, hoping the claimant does not pursue the matter further. This is a bad faith tactic that policyholders need to know how to handle.