Private-Passenger Auto Insurance Policyholder Risk Profile
What Does Private-Passenger Auto Insurance Policyholder Risk Profile Mean?
The “private-passenger auto insurance policyholder risk profile” refers to the assessment of risk that auto insurance companies assign to their policyholders. Insurance companies generally prefer drivers in certain risk categories. Drivers with the fewest accidents are the most desirable and are known as preferred drivers. Those who have the highest accident rates and file the most claims are classified as non-standard or sub-standard drivers. Standard drivers, who fall between these two categories, are average in terms of risk.
Insuranceopedia Explains Private-Passenger Auto Insurance Policyholder Risk Profile
Preferred drivers generally pay the lowest premiums, while non-standard drivers face higher premiums due to their higher risk to insurance companies. Insurers develop private-passenger auto insurance policyholder risk profiles to accurately assess the risks and liabilities they undertake. Premiums are priced according to risk to ensure the financial stability of the insurer; without accurate pricing, companies could incur losses by paying out excessive claims without sufficient income from premiums.
