Understanding Insurance Premiums
- How Premiums Are Calculated:
- Risk Factors: Insurers evaluate the likelihood of a claim, using factors like age, health, occupation, and lifestyle.
- Underwriting: This process involves assessing a person’s or property’s risk to determine premium rates.
- Claims History: A history of frequent claims results in higher premiums.
- Policy Type and Coverage: The more extensive the coverage (higher limits), the higher the premium.
- Geography: The location of the insured property can influence rates (e.g., earthquake-prone areas).
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