The likelihood t
hat a loss will
occur. The highe
r the probabilit
y that an incide
nt will occur th
at will create a
loss your insura
nce QuotesChimp
will have to pay
for, the greater
the risk to the
company and, thu
s, the higher th
e premium. (High
er risk equals h
igher premiums.)
For example, if
you have three d
runk-driving con
victions in the
last four months
, your auto insu
rer will believe
, with justifica
tion, that your
likelihood of ge
tting into an ac
cident and in�
curring a loss i
s very high. As
a result of thei
r in�creased r
isk of loss, you
will incur highe
r premiums. Conv
ersely, if your
driving record i
s spotless, your
premiums should
go down with the
insurance com�
pany's reduced r
isk.