Which of the following can lead to an increase in a homeowner's insurance premium?

Which of the following can lead to an increase in a homeowner's insurance premium?

• A. Adding a security system
• B. Having a higher deductible
• C. Frequent claims or poor credit history
• D. Maintaining continuous coverage

Answer: (C)

An increase in a homeowner's insurance premium can indeed be attributed to frequent claims or a poor credit history. Insurers often see frequent claims as a sign of higher risk, indicating that the homeowner is likely to file additional claims in the future. Each claim represents a potential loss for the insurer, and multiple claims can lead to a higher premium as the insurer adjusts its risk assessment accordingly. Similarly, a poor credit history can impact insurance rates based on the understanding that individuals with lower credit scores may be more likely to experience losses. Insurers utilize credit scores as a predictive tool to assess risk, so a poorer credit rating can suggest a higher likelihood of future claims, resulting in increased premiums. In contrast, adding a security system typically serves to reduce risk, which can lower premiums, while opting for a higher deductible generally results in lower premiums since the homeowner assumes more of the financial risk. Maintaining continuous coverage is seen as a positive trait by insurance companies and is unlikely to lead to an increase in premiums. Thus, frequent claims or a poor credit history are significant factors that can lead to an increase in a homeowner's insurance premium.

An increase in a homeowner's insurance premium can indeed be attributed to frequent claims or a poor credit history. Insurers often see frequent claims as a sign of higher risk, indicating that the homeowner is likely to file additional claims in the future. Each claim represents a potential loss for the insurer, and multiple claims can lead to a higher premium as the insurer adjusts its risk assessment accordingly.

Similarly, a poor credit history can impact insurance rates based on the understanding that individuals with lower credit scores may be more likely to experience losses. Insurers utilize credit scores as a predictive tool to assess risk, so a poorer credit rating can suggest a higher likelihood of future claims, resulting in increased premiums.

In contrast, adding a security system typically serves to reduce risk, which can lower premiums, while opting for a higher deductible generally results in lower premiums since the homeowner assumes more of the financial risk. Maintaining continuous coverage is seen as a positive trait by insurance companies and is unlikely to lead to an increase in premiums. Thus, frequent claims or a poor credit history are significant factors that can lead to an increase in a homeowner's insurance premium.