Introduction
Whenever you approach an insurance company to purchase a policy, the company will proceed to assess the insurance risk based on certain factors. Basically, these are parameters used by insurance firms to determine the level of risk and to help them determine the premium rates they will charge. The factors assist them in assessing your likelihood to file claims. If they establish that you are a high risk individual they will most likely charge higher rates or deny you the policy altogether. It is important to have these risk factors in mind when shopping for insurance.
History
Age is a major determinant of the premium rates an insurance firm is likely to charge you. For instance, if you want car insurance and are below the age of 25 you will be forced to pay higher premiums. Generally, it is believed that younger drivers are more likely to drive recklessly and cause accidents. The same principle applies to older people applying for health and life covers. They pay higher rates since they are more susceptible to illnesses due to old age; hence the insurance risk is high. The type of work you do will determine the amount of premiums you will pay. Persons who travel long distances on a daily basis pay more on their auto policy. If your profession is considered hazardous the premium rates on your health policy will be high. The same applies to individuals whose occupation is risky such as fire men.
Features
When assessing the insurance risk involved on a health cover, the insurance firm will consider your medical history and life style. In most cases, you will have to get medically examined before an insurance firm accepts your application. People who suffer from chronic diseases or other terminal illness pay higher premiums. Habits such as smoking and excessive intake of alcohol attract higher premiums. Your residential area plays a decisive role in assessing insurance risk and ultimately determining premium charges. If your location is prone to natural calamities such as earthquakes, you will pay a higher amount on your house policy. If you reside in a locality which is known for vandalism and car theft, the insurer is inclined to charge you higher premium rates. You will also be expected to pay more if you if you live in a highly congested area. The argument here is that more accidents happen in places with traffic.
Tips and comments
There are other insurance risk factors which insurance companies use in calculating premiums. There are providers who will check your credit score before deciding whether to give you an auto policy. Some will also look into the type of construction materials used when determining home insurance premiums. However, it is essential to bear in mind insurance companies do not necessarily use the same risk factors. In case your application is denied by one provider, you can conduct an extensive search, preferably online and you are most likely to come across an insurance company which will meet your needs.
