State Farm Auto Insurance Practice Test

What influences whether your insurance premiums will increase?

1. Your personal decision about coverage

2. The underwriting department's assessment

3. The type of vehicle insured

4. The location where the vehicle is parked

The correct answer is: The underwriting department's assessment

The underwriting department's assessment plays a critical role in determining whether your insurance premiums will increase. Underwriters evaluate various factors to assess the risk associated with insuring a particular individual or vehicle. This assessment includes reviewing the driver's history, the vehicle's safety features, the likelihood of claims in the area, and the overall risk profile developed from statistical data. A thorough underwriting process helps insurers set fair premiums based on calculated risk levels, which directly impacts premium adjustments. Other factors, such as coverage decisions, vehicle type, and parking location, can also influence premiums, but they are typically considered during the underwriting assessment rather than making the final determination. Hence, it is the underwriting department's decision, based on its comprehensive evaluation, that ultimately influences whether premiums will increase.