How Rates For Insurance Companies Work
Many factors determine rates for quotes. One myth is that rates are only set by law, unable to be changed. Although methods used by insurance companies to set rates are regulated, the actual quotes or rates you receive are not. You will see different rates for different companies. Comparing rates of different companies can save you a lot of money annually.
How your car insurance rate is set:
When you submit an application for car insurance, they use that information to assign you to a specific,individualized group. Once this group is established, they can look up the price for that specific group. At this time, any discounts will be subtracted from the current total. The entire process can be quite complex, dealing with insurance software to determine their liability to have you as a driver. Obviously, the more risk, the higher the reward in their eyes.
Where does your premium go?
-70 percent is for claims
-4 percent is the insurance companies profit.
-The other 26 percent is for other expenses.
Why do they have different rates?
Each insurance company will have different groups with different prices for each, so the rate you pay can vary from group to group. Insurance companies each have their own claim payments and expenses. They use all this information that you provide to set their rate.
What info can affect your insurance premiums?
1.Who you are:
-Your Age
-Are you male or female?
-Are you married?
-Zip code
-Where you work
-Your Credit History
-How long you have been a driver.
2.What you drive:
-Year
-Make
-What model is it?
-Annual mileage
-What are the safety features?
-How much does the car cost?
3.What you’ve done:
-Traffic tickets
-Do you have at least a B average in school?
-Let your policy lapse?
-Ever filed any claims before?
-Have you ever filed bankruptcy?
-Any defensive driving courses?
-Had any accidents
4.How much coverage you want:
-How much medical?
-You want rental reimbursement?
-Any roadside assistance?
-Bodily injury and property damage
-Comprehensive and collision.
Matt has been in the insurance business for 15 years and writes for EquotePro.com as a hobby. You can read his other articles or get free quotes with no obligation.
Tags: auto, Auto Insurance, finance, insurance, personal finance, personal savings
