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Insurance Broker Amarillo TX
The likelihood that a loss will occur. The higher the probability that an incident will occur that will create a loss your Insurance Broker Amarillo TX will have to pay for, the greater the risk to the company and, thus, the higher the premium. (Higher risk equals higher premiums.) For example, if you have three drunk-driving convictions in the last four months, your auto insurer will believe, with justification, that your likelihood of getting into an accident and incurring a loss is very high. As a result of their increased risk of loss, you will incur higher premiums. Conversely, if your driving record is spotless, your premiums should go down with the Insurance Broker Amarillo TX reduced risk.
The potential size of the claim. The higher the potential the higher the potential size of the out-of-pocket loss to the company, the higher premium. Thus, if you drive a Rolls-Royce Corniche, the potential size of a claim to repair the car is higher than in the case of someone who drives a Toyota Corolla. Thus, the property damage portion of the Insurance Broker Amarillo TX policy (see chapter 11) will be lower than that of the Rolls-Royce owner’s.
The percentage of the loss the Insurance Broker Amarillo TX must pay. The closer the insurance company comes to having to pay for 100 percent of the loss under the policy, the higher the premium will be. As we will see throughout this book, this aspect of pricing allows consumers great leeway in reducing their premiums by increasing the size of their individual responsibility to pay for a loss. If your Insurance Broker Amarillo TX, for example, pays 100 percent of their health care costs, their premium will be higher than if you paid the first $500 (known as a deductible).
We will deal with the issue of the price of insurance in more detail throughout the book.
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