| What factors affect the cost of insurance? |  |
| What factors affect the cost of insurance? | |
The likelihood of a loss occurring. The greater the probability a loss will occur can mean a higher rate (e.g., earthquake insurance in California).
The potential size of the claim. If you purchase a large amount of coverage (that is, if the item you are insuring is quite valuable), the chances are there could be a large claim and the premium will need to cover that possibility.
The percentage of loss the insurance company will be required to pay. If you have no deductible, the company will pay 100 percent on a covered loss. This increases their risk and your premium. To understand how a deductible works, consider the following: If the deductible on your auto insurance is $100, it means you agree to pay this amount first, and your insurance company will pay for damages exceeding this deductible. By increasing your deductible from $100 to $250, or even $500, this decreases the insurance company's risk, which may mean a savings in your premium.
Other factors can influence premiums such as the number of lawsuits and the average amount awarded in a given state. In short, your insurance company tries to ascertain how much it needs to accumulate to cover all the claims it will receive.
| Association of Wyoming Insurance Agents | ||
 |
P.O. Box 799 Sundance, WY 82729-0799 Voice: (307) 283-2052 Fax (775) 796-3122 Email: awia@vcn.com |
|