What is typically NOT a factor in determining insurance premiums?

The determination of insurance premiums is based on objective criteria that reflect the risk associated with insuring a policyholder. Factors such as the claim history of the policyholder provide insight into their previous interactions with insurance and the likelihood of future claims. The age of the policyholder is significant because it can affect risk; for example, younger drivers may pose a higher risk for auto insurance than older, more experienced drivers.

The type of coverage selected naturally impacts the premium, as different types of coverage represent varying levels of risk and potential payout for the insurer. In contrast, the preference of the insurance agent does not typically influence the formula used to calculate premiums. Instead, premiums are determined by standardized underwriting criteria and actuarial data that aim to objectively assess risk. Therefore, the preference of an individual agent does not play a role in the calculations of premiums and is not a factor when determining how much a policyholder will pay for their insurance.