|
Underwriting and Rating
Comparison shopping for car insurance is well worth the effort. Premiums
are calculated on a large range of factors and could vary a great
deal from one insurer to another for the same policy. The most important
items in determining your rate are:
- Your age, sex, and marital status. For example,
young, single male drivers usually pay more than any other group.
- Where you live. The state is divided into territories
for rating purposes. Usually, people in metropolitan areas pay more
than those in less crowded places.
- Your car. The year, make, and model of your car
have a bearing on your premium. The less it costs to repair or replace
your vehicle, the lower the cost of your premium. Sports cars and
cars with high powered engines cost more to insure than cars with
smaller engines.
- How you use your car. The more you drive, the
more you pay.
- Prior insurance coverage. Insurers may ask you
if you had insurance coverage beforehand. If you have previously
been canceled for nonpayment of premiums, insurers want to know.
If you have had insurance, the prior company can tell the new insurer
a little about your claims history.
When an insurance company considers your request for auto coverage,
it will take into account a number of different factors about you
and your driving record. Just because you apply with a certain company
does not mean you will be provided coverage by that company.
After completing the underwriting, the insurance company will place
you in one of the three basic categories of drivers listed below.
Each company adopts its own rating system for deciding whether to
insure a person. Those with the lowest risk factors (least likely
to have a claim) will receive the lowest rates.
- Preferred. This category is intended for drivers
that companies consider to be the best risks, which usually means
the safest drivers. These insureds are usually ones with clean driving
records over the past three to five years. These are given the lowest
rates.
- Standard. This category is intended for moderate
risk drivers. The rates are higher than the preferred rates. These
drivers are usually driving family-type cars and have a reasonably
clean driving record.
- Nonstandard. This category is intended for
drivers that companies consider to be high risk. Usually drivers
in this category have the highest rates. These drivers may include
under age 25 drivers with less driving experience, drivers with
tickets or accidents, drivers with a poor premium payment history,
and drivers with a reckless or drunk-driving history.
Your representative ought to be able to tell what categorization you
fit into. The dividing lines are not always constant across insurers,
but in general an applicant with chargeable accidents will be denied
coverage by the lowest cost insurers in the above examples. These
insurers are relatively low cost because their clientele are better
than average drivers. Since you usually cannot tell from the name
or promotional ads of an insurer what its underwriting criteria are,
seek the help of a qualified agent to find which insurer will insure
you.
|
