| According to this particular law, it is impossible to | | | | cars the average person is driving in that area. This is |
| predict when you will incur a loss of some kind. No | | | | the best and only fair way that we have to date to |
| one can predict what will happen to you. They can | | | | determine such costs of premiums. |
| however use historical data to determine and make | | | | Insurances companies can also measure how much |
| predictions for what might happen. For example, no | | | | to charge based off of each participant's similarity. |
| one can predict if you will get into an automobile | | | | For example, if you have a teen that is getting ready |
| accident tomorrow, but they can predict how many | | | | to start driving, then the insurance company can look |
| accidents are likely to occur and where they are likely | | | | at nationwide statistics and come to the conclusion |
| to occur in your area. This can be done by looking at | | | | that they are more likely to get into an accident than |
| the past data for that particular area. This does not | | | | an adult will, even if they live in the same household. |
| offer any guarantees, but it gives insurance | | | | Insurance companies have also found evidence that |
| companies a good idea of what is possible. | | | | has led to determine how much the difference |
| By using this information, an insurance company can | | | | between what a man and a woman will pay. They |
| determine how much that a premium on a policy | | | | have also determined the difference in what kinds of |
| should be for a particular person living in a particular | | | | cars get into accidents more and what color of car is |
| area. They can also calculate how much of a | | | | more likely to get into an accident. All of this |
| premium is needed based off of previous accidents, | | | | information determines what you pay. The best idea |
| the average income in the area, and what kind of | | | | is for all of us to drive safely. |