The first thing I want to say regarding this topic is that insurance companies DO NOT discriminate by race or sexual orientation. Insurance rating is based solely on factors that are "across the board" variable from person to person. My way of describing insurance rating is likening it to the uniqueness of ones fingerprint. Although, in this scenario, you are not born with a specific insurance fingerprint but rather YOU control the way it looks to the company. So, keep on reading and learn about how your insurance fingerprint is analyzed and rated by the average insurance company.
The insurance rating system varies from company to company. Some companies keep it simple and others use a vast number of variables to further diversify the premiums. It really depends on how the insurance companies business plan is formed. There is no right or wrong way to do it. Rather than go through every single possibility, I will discuss the basic rating factors that are generally used by all insurance companies. These factors include but are not limited to; age, gender, violations, at fault accidents, comprehensive claims, # of vehicles, # of drivers, type of vehicles, and many more. Read on for some quick descriptions fo some common rating factors.
AGE: One of the biggest factors in insurance rating is the age of drivers on the policy. The younger the driver, the higher the insurance company will rate the driver. All drivers, male or female, have their highest rates from ages 16-24. Insurance companies have decided that this age group defines the learning stages of defensive driving. Statistics show that drivers have a much higher percentage of at fault accidents between these ages. BUT, one way you can avoid being rated at the highest factor for your age group is by taking either defensive driving or taking drivers education. All drivers between ages of 16-24 who have taken either course will have their rating factor decreased by most insurance companies. From ages 25-54, you see a steady decrease in premium rates from year to year. From ages 50-55+ most insurance companies start implementing senior discounts, rating individuals at their lowest possible age rates.
Gender: For all of you men out there, I want to apologize ahead of time for this. Even though we think we are the better drivers, that isn't the case according to insurance companies. Females have better rates than males in each age group. Not much else can be said about this factor since you are born into this one.
Violations: One of the most obvious rating factors are violations and accidents. Each insurance company looks at violations in different ways. But, all insurance companies will increase their rates based on the # or types of violations you have.
At Fault Accidents: At fault accidents vary from company to company as well. For some companies, if your at fault accident had no pay out, they may not count it. For others, if it's on the record, your getting an increase in your rate. For both violations and accidents, if you have none in the past 3 to 5 years, most companies will give you a discount for that.
Comprehensive Claims: Comprehensive claims are not always a factor. With comprehensive claims, they generally increase coverages such as towing and labor, rental reimbursement, and the comprehensive coverage if you have a large number of these. Just like at fault accidents, some insurance companies will give you first accident forgiveness. So, if you have your first accident a year into your policy, with that endorsement you may not have an increase in your rate.
# of Vehicles: It should be fairly obvious that the more vehicles on the policy, the more your insurance premium will be. Not much can be said about this one. But, I will say that most companies will give you a multi-vehicle discount. This feature will, instead of doubling the cost for adding a second vehicle, give the second vehicle to you for 3/4 or 1/2 the price depending on the company. Now, not all companies have this feature, but I can help you find the ones that do.
# of Drivers: You may think that the more drivers on the policy, the higher the premium, but that isn't always the case. Because of some of the other rating factors, you may receive credits for having certain drivers on the policy. But, in most cases, the more drivers on the policy the higher the premium. And, if you are a married couple who is getting ready to add your 16 year old son as a driver, don't be surprised to see a big jump in insurance premium. The thing we generally advise is give the youngster an older car with liability only coverage.
Type of Vehicles: One thing that catches many people off guard is when an older car is rated higher than a newer car for certain coverages. The truth is that it isn't about the year, make and model of the vehicle but rather the size of the engine, the weight of the vehicle, and how often you use it. Faster, bigger vehicles generally are rated higher for liability because they cause more damage. Newer, more expensive vehicles will be rated higher for full coverage because they cost more to replace. The amount of usage for the vehicle is the only way to change these rating factors for most insurance companies. In other words, the more you use the vehicle, the more your vehicle make-up will affect the rate.
These are just a few of the rating factors that help to create your individual rating status for many of the companies out there. The best way to keep your rates low is to drive safe and smart. Some of us, like me, learn the hard way. If you are one of those out there that have a hard time finding good rates, don't hesitate to contact me and I can help you find the company with the right formula for you.
The insurance rating system varies from company to company. Some companies keep it simple and others use a vast number of variables to further diversify the premiums. It really depends on how the insurance companies business plan is formed. There is no right or wrong way to do it. Rather than go through every single possibility, I will discuss the basic rating factors that are generally used by all insurance companies. These factors include but are not limited to; age, gender, violations, at fault accidents, comprehensive claims, # of vehicles, # of drivers, type of vehicles, and many more. Read on for some quick descriptions fo some common rating factors.
AGE: One of the biggest factors in insurance rating is the age of drivers on the policy. The younger the driver, the higher the insurance company will rate the driver. All drivers, male or female, have their highest rates from ages 16-24. Insurance companies have decided that this age group defines the learning stages of defensive driving. Statistics show that drivers have a much higher percentage of at fault accidents between these ages. BUT, one way you can avoid being rated at the highest factor for your age group is by taking either defensive driving or taking drivers education. All drivers between ages of 16-24 who have taken either course will have their rating factor decreased by most insurance companies. From ages 25-54, you see a steady decrease in premium rates from year to year. From ages 50-55+ most insurance companies start implementing senior discounts, rating individuals at their lowest possible age rates.
Gender: For all of you men out there, I want to apologize ahead of time for this. Even though we think we are the better drivers, that isn't the case according to insurance companies. Females have better rates than males in each age group. Not much else can be said about this factor since you are born into this one.
Violations: One of the most obvious rating factors are violations and accidents. Each insurance company looks at violations in different ways. But, all insurance companies will increase their rates based on the # or types of violations you have.
At Fault Accidents: At fault accidents vary from company to company as well. For some companies, if your at fault accident had no pay out, they may not count it. For others, if it's on the record, your getting an increase in your rate. For both violations and accidents, if you have none in the past 3 to 5 years, most companies will give you a discount for that.
Comprehensive Claims: Comprehensive claims are not always a factor. With comprehensive claims, they generally increase coverages such as towing and labor, rental reimbursement, and the comprehensive coverage if you have a large number of these. Just like at fault accidents, some insurance companies will give you first accident forgiveness. So, if you have your first accident a year into your policy, with that endorsement you may not have an increase in your rate.
# of Vehicles: It should be fairly obvious that the more vehicles on the policy, the more your insurance premium will be. Not much can be said about this one. But, I will say that most companies will give you a multi-vehicle discount. This feature will, instead of doubling the cost for adding a second vehicle, give the second vehicle to you for 3/4 or 1/2 the price depending on the company. Now, not all companies have this feature, but I can help you find the ones that do.
# of Drivers: You may think that the more drivers on the policy, the higher the premium, but that isn't always the case. Because of some of the other rating factors, you may receive credits for having certain drivers on the policy. But, in most cases, the more drivers on the policy the higher the premium. And, if you are a married couple who is getting ready to add your 16 year old son as a driver, don't be surprised to see a big jump in insurance premium. The thing we generally advise is give the youngster an older car with liability only coverage.
Type of Vehicles: One thing that catches many people off guard is when an older car is rated higher than a newer car for certain coverages. The truth is that it isn't about the year, make and model of the vehicle but rather the size of the engine, the weight of the vehicle, and how often you use it. Faster, bigger vehicles generally are rated higher for liability because they cause more damage. Newer, more expensive vehicles will be rated higher for full coverage because they cost more to replace. The amount of usage for the vehicle is the only way to change these rating factors for most insurance companies. In other words, the more you use the vehicle, the more your vehicle make-up will affect the rate.
These are just a few of the rating factors that help to create your individual rating status for many of the companies out there. The best way to keep your rates low is to drive safe and smart. Some of us, like me, learn the hard way. If you are one of those out there that have a hard time finding good rates, don't hesitate to contact me and I can help you find the company with the right formula for you.
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