6.3 Why is it expensive?

To an insurance company, you are a collection of risks. Your sex, your age, your marital status, and what neighborhood you live in all contribute to an insurer's prediction of whether you'll file a claim.

If, for example, you are a homeowner who lives in a coastal area prone to storms, or a rural region far from fire stations, you are judged to be a higher risk because people in those situations have tended to file more, and more expensive, insurance claims.

The good news is that all insurers don't price the same risks identically. Insurers still operate as competitive businesses, focusing on certain markets and avoiding others. What's more, some operate their businesses more efficiently than others, passing on the savings to consumers.