What does "higher risk" mean in the context of auto insurance?

In the context of auto insurance, "higher risk" specifically refers to a higher chance of filing a claim based on various factors. Insurers evaluate multiple elements to determine a driver's risk level, including but not limited to driving history, traffic violations, accident history, and demographic information. A driver deemed higher risk may have a history of accidents or traffic violations that suggest they are more likely to file a claim compared to a driver with a clean record.

This assessment is crucial for insurance companies as it helps them price policies appropriately, setting higher premiums for individuals considered higher risk to mitigate potential losses. Understanding this concept helps both the insurer and the insured comprehend how risk influences coverage options, costs, and the overall underwriting process.