Why do insurance companies offer different rates to different people?


Insurance companies base their clients’ rates on statistical information and other important documents that give them an idea on what kind of person their client is. Some people have better records than others and some have worse. This is the main reason why there are different rates being offered to different people. Here are some common instances in which insurance companies give different rates to people.

  • People differ in their financial standing. Usually, persons who are “good payers” are given better deals than people who are not. This is due to the fact that “good payers” are actually more profitable to car insurance companies because they can expect that these people will really pay their dues. Those who have a bad record are seen as a greater risk than those who have good credit.
  • Age is also a factor that they consider. Statistically they have found out that a certain age group, the teens, is involved in many more car related accidents than the others. That age group now suffers the effects since car insurance companies generalize them and categorized them as a greater risk.
  • Health also plays a vital role in their assessment. Everything that may seem to be a hindrance to driving will also most likely be considered a risk and his will in fact increase your rates.
  • Another thing that car insurance providers take into account is your lifestyle. In terms of lifestyle they consider whether or not you have a permanent residence, what is your job, how often do you need to take the car driving, what kind of person are you. The importance of looking at this information is to tell them the risks you pose and also your ability to run away from your debt.
  • Car insurance companies also take into account what kind of car you want to insure. People will usually find that better cars often are equated to better car insurance.
  • There are also those insurance companies that offer multi car insurance policies. This means that one policy covers more than one car.

The most important thing that car insurance companies take into account is your own personal preferences. This means that you will have the final say on what kind of insurance you will have. Their job will simply be to assess your current situation and will present to you their best offers. If you do not like their offer, you are free to go and look for other insurance companies that will better suit you.