AUTO INSURANCE ARTICLE

Underwriting and Rating: Factors Shaping Your Auto Insurance

By: letter_woman

There are many factors affecting auto insurance rates from the demand side – which means, you the motorist who seeks auto insurance. But not much is said about the factors from the supply side which means the auto insurance companies. These two supply side factors in auto insurance rates are underwriting and rating.

The insurance industry goes through an underwriting process which analyze your personal circumstances and how much risk you carry. You are then grouped together with others who are seen to be posing a similar weight of risk. From the underwriting process, insurers then assign a price based on a rating system.

While rating guidelines is normally standard across the auto insurance industry, each company may have its own underwriting and rating system. This explains why different companies charge different rates for the same coverage. This underscores the need to gather quotes from many companies for the same coverage. Comparison shopping may cost you more time now, but it will be for your financial advantage in the long run.

Companies consider the following points to determine your premium rates:

• Age, gender and marital status – 17 years olds and younger, males and singles generally get high premium ratings.

• Coverage limits - as the insurance coverage limits you set go higher, so does you’re the cost of your premium.

• Driving history - motorists with a record of at-fault accidents and tickets generally pay a higher premium than those with sterling driving history.

• Policy included members – if you have a teen driver who is part of your policy, your premium would considerably be higher (unless they have their own policy). An insurer can refuse to pay a claim and/or can cancel your policy if you have but didn’t include a teen driver on your insurance application or policy.

When you are renewing or even buying your insurance for the first time, inquire about possible discounts. Not all companies offer the same discounts, so ask your insurance company if it has for any of the following:

Package insurance – availing of the insurance services of a one-stop insurance company for your car/s and home needs might give you significant discounts. The company may give you discounts on the basis of loyalty rewards or their VIP rates;

Theft-deterrent installation - installing an approved theft deterrent system in your motor vehicle provides it with first-degree protection that the chances of it being stolen are reduced. This in turn reduces the chances of you making a theft claim against your auto insurance policy;

Keeping an accident- and conviction-free record – the rule of thumb is that, the more spotless your driving record is, the better command you will have on auto insurance premiums. Conversely, the more accident record you have, the more expensive is your insurance premium payments going to be.

Lowering your mileage - you may want to consider managing your car use to a limit per year, by taking alternative transportation such as car-pooling or public transit if possible. With a lower mileage and lower use, your car will be less prone to mechanical malfunction and damage;

Student with good grades - some companies see this as a signal for a disciplined driving behavior, so show those A’s. And be rewarded with meaty cuts in your premium payments.

Now that you know more about the factors influencing how much you pay for your auto insurance, you can now search for the best possible value for your money.