For example, if I get car insurance and get into an accident, why should that increase my premiums. I’m insuring against that risk, so the fact that I had an accident surely shouldn’t change by risk factors.
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Some people drive their entire lives without ever getting in an accident. The insurance company just sits there collecting payments and doesn’t actually give anything back.
If you get in an accident, the insurance company needs to pay out anywhere from $1000-100,000 on your behalf. You’re costing them money. The guy who never gets in an accident isn’t. That’s why it’s more expensive for you.
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