How To Buy Automobile Insurance
What Factors Are Considered In Setting An Automobile Insurance Premium?
Next » « Previous3/4
Insurers start with a dollar base rate for each type of coverage which reflects that company's ongoing experience with similar policies. Then the companies change that rate according to the individual applicant as follows::
- Accidents: While the impact varies by company, generally accidents for which you were at fault during the past three years which result in your insurer paying at least $1,000 will cause your premium to increase. Some companies call this a "surcharge" and will drop it after a period of time during which you have no further accidents. Some companies have a policy of not considering the first accident when setting rates.
- Your driving record -- particularly moving violations such as speeding tickets. Some people have such poor driving records that they are unable to obtain standard automobile insurance. However, states have "assigned risk" or "high-risk pools" to cover such drivers (see below.) You can check your record with the Comprehensive Loss Underwriting Exchange (CLUE), a database of claims history that many insurers check to decide whether to insure you and how much to charge. ChoicePoint, an offshoot of Equifax, the credit-reporting company, maintains the database. To get a copy of your profile for free, click on C.L.U.E. Auto Report at www.choicetrust.com/servlet/com.kx.cs.servlets.CsServlet?channel=welcome&subchannel=clue ,. Or call 866.312.8076.
- The neighborhood where you live
- The age of the other drivers -- particularly drivers age 25 or younger. Discounts may be available if a student maintains at least a B average and passes a driver-safety course.
- Sex
- Marital status
- Your credit score. (Yes, your credit score.) Scoring models vary from company to company to determine how a person's credit will affect their likelihood of having an accident. Factors companies consider include payment history, credit balances, credit limits, the age of your earliest account, whether you shopped for loans and the type of loans you have. According to Consumer Reports, there does not appear to be any way of knowing whether your credit score will give you a lower or high premium because each insurer calculates scores differently.
- Miles driven. If you don't drive many miles per year, some companies offer insurance tied to the amount of miles you drive each year (as verified by a car mounted Global Positioning System). This is particularly useful for a second car.
Get Your Personal Guide
Please share how this information is useful to you. 0 Comments
Post a Comment Have something to add to this topic? Contact Us.