What is a common outcome of having a poor claims history?

Having a poor claims history typically indicates that an individual has been involved in multiple accidents or has made numerous claims, which insurance companies interpret as a higher risk for future claims. As a result, insurers may increase premiums to compensate for this perceived risk. The rationale is that if a policyholder has shown a pattern of filing claims, they might continue to do so in the future, leading to potential financial losses for the insurance company.

In contrast, a clean claims history often leads to lower premiums or better options due to the perception of reduced risk. Higher premiums reflect the insurer's need to protect themselves against anticipated future claims, making this a direct correlation between claims history and pricing in the insurance market.