Insurance is an essential part of your personal financial security. You and your family may face unexpected and difficult scenarios at certain points in life. In the aftermath of such situations, having secured appropriate insurance can make all the difference. However, while various personal lines insurance policies can help protect your financial interests and future prosperity, their premiums may be another strain on your budget.
Fortunately, by understanding the various facets of insurers’ quoting processes, you may be able to optimize your situation and attain ideal rates without sacrificing coverage. Your personal risk perception plays a critical role in these calculations, as carriers must carefully assess your circumstances and background to determine how risky it may be for them to insure you. The team at Marshfield Insurance is prepared to help you understand and minimize your perceived risk levels.
What Is Personal Risk Perception?
Personal risk perception refers to how insurance carriers view you regarding potentially offering coverage. Depending on the type of coverage for which you’re seeking a quote, companies may consider many aspects of your life when determining how risky they perceive you to be. While factors considered and the weight given to each may vary, this process could often include analyzing your location, age, gender, family size, financial situation and claims history.
How Can I Improve My Personal Risk Perception?
There are many ways you might approach lowering your perceived risk levels, but appropriate steps and ideal methods may vary depending on the types of which you need or are seeking. Consider how you might implement various strategies to reduce your personal risk perception and potentially achieve more advantageous rates:
Home insurance—Your homeowners insurance is integral to safeguarding one of your most expensive investments and may even be required if you have a mortgage.
Consider the following ways you might lower your perceived risk levels and enjoy lower rates:
Update your home. Your home’s age, including that of its roof and electrical and plumbing systems, is often a strong consideration for carriers. Making updates or upgrades can lower your risk perception.
Install protective measures. Adding security features and physically fortifying your home can significantly reduce your perceived risk levels. Consider adding deadbolt locks and security systems to ward off burglaries and installing smart fire alarms and water leak detectors to limit potential losses arising from fires and leaks, respectively.
Reduce liabilities. Home insurance companies may also weigh your liability risk levels. Avoid having attractive nuisances, such as swimming pools and playground equipment, on your property or at least secure them behind fences and locked gates.
Improve credit. Insurers in many states are permitted to use your credit score to calculate a credit-based insurance score. This figure is typically used to help gauge your personal financial responsibility and, subsequently, how risky it may be to insure you.
Auto insurance—Personal auto insurance is legally required in most states and failing to retain appropriate coverage could lead to fines and license revocation. But if auto insurers believe you’re risky to cover, you’ll have to pay more for your policy.
The following steps may help you appear more favorably in this regard:
Reconsider luxury vehicles. Your automobile’s make, model, year and overall value are all considered during the quoting process. Driving a more average and affordable car will generally make you appear less risky to carriers.
Drive safely. Insurance carriers take a close look at your driving records when determining your rates. If you have a history of accidents and violations, it will likely hurt your risk perception. Commit to driving responsibly by adhering to traffic laws and avoiding aggressive habits behind the wheel.
Consider telematics. In the digital era, many vehicles are now equipped with technology to track your driving habits. This data can help insurers closely analyze your behavior behind the wheel and could potentially lower your perceived risk levels.
Refrain from small claims. Although your insurance’s primary purpose is to help manage vehicle-related losses, you may wish to avoid filing a claim for minor damage. For example, repair costs from a minor fender bender or chip in your windshield may barely exceed your deductible, meaning you’d receive little aid but possibly be seen as riskier upon renewal.
Life insurance—Planning for your family’s financial future is essential. Life insurance policies can help you ensure your loved ones receive financial assistance after a tragic loss. However, carriers may charge more for this fiscal security and peace of mind if you’re considered high risk. Consider the following potential solutions:
Take a medical exam. Although some life insurance policies may not require you to submit to a medical exam, doing so can go a long way in alleviating carriers’ concerns. These exams are typically similar to an annual physical and may give insurers general insight into your health by recording metrics such as your blood pressure, weight and cholesterol levels.
Don’t procrastinate. As a general rule, life insurance companies consider older individuals riskier. With this in mind, purchasing coverage at a younger age may help you and your family establish essential financial security for lower costs. Additionally, some policies may allow you to lock in your premiums for the rest of your life, even if you encounter health issues later.
Avoid smoking. If you currently smoke, quit. If you don’t smoke, don’t start. Life insurance companies weigh smoking status heavily when considering your personal risk perception, as tobacco use can contribute to many serious health problems.
Refrain from dangerous situations. Your insurance carrier may also weigh your occupation and hobbies during their risk assessment and quoting processes. For example, if you work in a dangerous industry, such as construction or agriculture, or enjoy risky activities, such as skydiving and motorsports, you’ll likely have to pay more for coverage.
How to Find the Right Coverage
At Marshfield Insurance, our knowledgeable and dedicated team can help you understand your personal risk perception and identify ways you might be able to improve your risk profile in the eyes of insurance carriers. Contact us today to speak with one of our experienced professionals.
© 2025 Zywave, Inc. All rights reserved. This Know Your Insurance document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.