What does a higher insurance premium typically reflect?

A higher insurance premium typically reflects a higher likelihood of filing a claim. Insurance premiums are calculated based on the risk associated with insuring an individual or entity. When an insurer assesses a higher likelihood of claims being made, whether due to factors such as the insured's health history, driving record, property location, or other risk factors, they adjust the premium accordingly. This higher premium compensates the insurer for the expected increased costs associated with potential claims.

The other options do not accurately connect to the fundamental principle of how premiums are determined. For instance, a lower risk assessment would generally lead to lower premiums, while more comprehensive policy coverage often implies higher premiums, not solely due to risk but also because of the additional protections included. Lastly, a decrease in the age of the insured does not correlate directly with premium increases, as age can sometimes reduce risk in certain contexts (such as health or auto insurance). Thus, the understanding that a higher premium signals a higher likelihood of claims helps clarify the relationship between risk and cost in insurance.