Many factors could affect the increase and decrease of your premiums. Insurance companies use them to determine the level of risk. It’s also possible that one factor could weigh less or more depending on how they are valued to the underwriter. On top of that, each insurer uses different sets of algorithms that give rise to price difference even for the same type of coverage.
During your application, you will be assessed according to the potential payout the company has to pay in case you file an insurance claim. These assessments are performed using predetermined algorithmic rules based on the data fed to the system. Speeding tickets, previous insurance claims, violations and even your credit score will play an important role.
Generally, insurance companies rely on your driving history to gauge whether you’ve been a good driver or not. A cleaner record means that you’ll likely to get affordable insurance premiums compared to those who have smeared driving records. Traffic violations as far as five to ten years may be considered depending on the company itself. Though, not every insurer does this, but it’s always a good idea to keep your driving record as clean as possible at all times.
Another factor that may influence the underwriting process is the car itself. At this stage, the insurer looks into previously filed reports from the Highway Loss Data Institute (HLDI). The office holds accident, crash and casualty reports. The goal here is to find out what types of vehicles are more prone to an accident. If you want to save money on insurance, stay away from huge, expensive and luxurious vehicles. A car that needs substantial amount of cash for repairs usually commands higher insurance rates as well, thus, higher rates.
The difference in premium rates lies within the company itself. You can easily figure this out if you have spent time comparing one company to the other. This means that comparison-shopping will save you hundreds of dollars if done properly.
The insurance industry is now becoming a cutthroat business. Insurers want to keep their clients and entice new ones. One way to do this is to offer continuous discounted price tags and extended coverage. If you find an equally competitive insurer that you think is far better from your current one, don’t hesitate to make that switch.
From the consumer point of view, a healthy competition breed better quality and top-notched services. Gone are the days when you are forced to deal with one or two insurance providers in your area. Shop around; ask insurance quotes from various companies and you’ll likely end up on a cheaper one.
Some states implement price gouging to protect its constituents. Insurers are not allowed to increase or reduce the price because it’s illegal. No matter where you go or what company you’re in, the price stays the same. If you want to get the best price, start by identifying your needs and wants; And, see how the prices will vary with respect to these laws.
Always strive to become a good driver and rewards will come in due time. Stay out from unnecessary troubles as much as you can, abide traffic rules and regulations, install car safety devices and avoid remiss in your duties.
