Private-Passenger Auto Insurance Policyholder Risk Profile

Published: | Updated: September 11, 2016

Definition - What does Private-Passenger Auto Insurance Policyholder Risk Profile mean?

"Private-passenger auto insurance policyholder risk profile" refers to the evaluation of risk that auto insurance companies assign to their policyholders. Insurance companies prefer drivers in certain risk categories. Drivers who get in the fewest accidents are the most desirable to insurance companies and are called, accordingly, preferred drivers. Drivers who get in the most accidents and file the most claims are called non-standard or sub-standard drivers. Standard drivers are those who fall in the middle of these two categories are.

Insuranceopedia explains Private-Passenger Auto Insurance Policyholder Risk Profile

Preferred drivers typically have to pay the lowest premiums. Conversely, non-standard drivers can face increased premiums for their auto insurance because they are a higher risk to insurance companies. Insurance companies create private-passenger auto insurance policyholder risk profiles in order to accurately understand the risks and liabilities that they assume. Premiums must be priced in accordance with risk; otherwise, the insurance companies could lose money by paying out too many claims and not generating enough income through premiums.

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