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How Do “They” Price Auto Insurance?

By October 18, 2012 May 7th, 2019 No Comments

You may wonder why two people with the same type car pay different amounts for their auto insurance.

Years ago, rating was far simpler. But today, the various companies employ many methods to come up with a final rate. Some give discounts for variables that matter. For instance, the mroe miles you drive, the greater the “exposure” of time you are on the road. Hence, the likelihood is greater for a claim. Some seem funny and frivolous, but if they filed them with the state, they may end up using them. One company granted a discount for being a Sam’s Club member a few years back.

But the bottom line is that you want to find an agent who will help find ALL the discounts you deserve. We do this for a living and we want to do a good job for you. The happier you are, the more family and friends you’ll send our way. That’s the way our agency chooses to grow.

One of the things that impact a rate include where you live. As you might guess, living in a rural area is likely going to be cheaper than being in a big city. Personal variables like age, driving habits, prior claims and violations history, whether you insure your home or apartment with the same company, how many years of driving experience you have, which pay plan you choose ALL have an impact on your pricing model. There are just a few of them…there are more!

Every line on that paperwork you get comes from statistical data.  The pricing is built within each of the coverage options.  For example, you may see a higher rate on “Comprehensive” coverage if a vehicle is an attractive one for thieves.   If it’s one that costs quite a bit to repair or replace after a crash, the “Collision” amount may be higher than for a less pricey vehicle.  Believe it or not, there’s a boatload of science that goes it pricing!

The companies go to great lengths to analyze data that is helpful in predicting future claim expenses.  There really is quite a bit of science behind it. That being said, the predictors are right MOST of the time, but not every time. Again, using an independent agent (we are!) is helpful because we can direct you toward options that will save you money without sacrificing coverage.

I wrote this blog because I often hear folks talking or posting about whether they pay the same amount as the next guy. There are so many variables, it’s mindblowing.

Free reviews are always available at our office. We’re dead honest and if it makes sense to stay where you are, we’ll tell you! Insurance is too important to guess and hope you have “the right stuff”…talk to us and KNOW!