If we are to look at the U.S. car insurance prices from a different perspective, we can clearly see that it isn’t that bad after all. For instance, car insurance prices in the U.K. have been skyrocketing for the past few years because businesses had to deal with their losses and that fraud that plaque the market.
In the U.S. soil, residents in Louisiana are paying the highest insurance rates averaging to $12,000 a year, while Iowa residents were lucky enough to get an annual average rate of just a little over $1,000. The price of insurance is unique to the individual that is why some people are paying $800 a month for their car insurance while others landed on with just $35 a month. Maybe you are thinking that those people are just lucky to get those dirt-cheap prices but in reality, they’re not. Here’s why.
The Actuarial Tables
When it comes to car insurance, people who compute your insurance rates are called actuaries and the reference tables that they are using to assist them in their computations are called actuarial tables. Although these tables contain complex mathematical probabilities, they have only one goal – to calculate the risk of a driver using predefined variables.
These tables will help the actuaries compute John Doe’s probability of involving into a car accident with respect to his driving records, life circumstances, credit history, etc. These tables will also help determine how much will it cost to the company should a claim is filed.
If you think it’s a game of chance or something like computing the odds of winning in a Las Vegas Casino, then you’re darn good at guessing. But actuarial tables are far more complicated than that with advanced mathematical formula involved. You also need to be knowledgeable to understand these stuffs.
Understanding the formula
If you were given the chance to see how these tables are being utilized, your eyes would probably glaze over unless you love mathematics to the bare bones. Determining insurance policy using these tables is not something you see or do every day.
Nonetheless, you don’t have to understand them down to the last operation. All you need to know is to watch the variables that you have in control, and you are guaranteed for a lower insurance cost. Some of these variables include your age, marital status, your address or location, any moving violations, model and make or your car, your occupation and so on.
Leverage
As mentioned earlier, actuaries are only there to compute based on the information you feed them. If your insurance rate gets too high or too low, you are entirely responsible for it, and you deserve it. Most of the variables that the actuarial tables are using are controlled. If you keep your driving history clean, drive a more conservative or not so expensive car, installed several anti-theft features, you can be sure that you’ll be getting the lowest car insurance rates that you are hoping for.
Also, have you tried comparison-shopping lately? If you want to save money, read more about it.
