How do insurance premiums typically vary for high-risk individuals?

Insurance premiums are fundamentally based on risk assessment. For high-risk individuals, the likelihood of a claim being made is substantially greater due to various factors such as their health, driving record, or history of claims. Insurers use this risk assessment to determine the cost of coverage.

When individuals pose a higher risk, insurance companies offset this potential financial exposure by charging higher premiums. This practice helps to ensure that the premiums collected align with the anticipated costs of potential claims. While high-risk individuals may still have access to insurance, the increased premiums reflect the higher likelihood that the insurer will have to pay out on claims associated with these individuals. This principle of risk-based pricing is a cornerstone of how insurance operates, ensuring that the coverage remains financially viable for the insurer while still providing the necessary protection for the insured.