What is the main factor that affects the premium of a personal auto insurance policy?

The primary factor impacting the premium of a personal auto insurance policy is previous claims history. Insurance companies assess the risk associated with insuring an individual based on their past behavior, particularly how frequently they have filed claims in the past. A history of multiple claims can indicate higher risk, leading to increased premiums, as insurers anticipate potential future claims.

When evaluating risk, insurers look for patterns in an applicant's previous claims. For instance, someone with a history of accidents or insurance claims may be deemed more likely to file additional claims in the future. This assessment directly influences the rates set for their auto insurance policy.

The importance of claims history underscores the principle of risk assessment in underwriting and premium calculation. Insurers aim to mitigate their risks by charging higher premiums to those who have demonstrated a higher likelihood of necessitating payouts.