Experience Rating

When you’re doing the insurance thing, insurance companies use the “experience rating” method to help determine what your premium should be.

Experience ratings might be based on your actual experience as an individual, or they might be based on a group of people just like you. For instance, if you like to keep your life action-packed like a Fast and the Furious movie, your individual history might prompt health insurance companies to raise your premium (as if living on the edge wasn’t costly enough…). If you’re a teenage boy getting car insurance, it’ll likely be more expensive than for a teen girl of the same age, because that group (inevitably hormone-driven teenage boys) have been proven with data to be riskier drivers.

Experience rating is also common for workers’ compensation insurance and other liability policies (we know this from experience).