by Matthew James

Many factors will determine what premium rate you see when you ask for quotes. A common misconception is that rates are set by law and cannot be changed. Although the methods each auto insurance company uses when setting rates are regulated by state laws, the rates themselves are not set by the state. This fact means that there will be different rates for each company. Once you understand more, you’ll see why comparing rates from different companies can save you alot of money.

How they set your insurance rate:

Let’s say you submit your application to an insurance company of your choosing. They will first organize you according to the information in your application, including a few other sources. Once they have determined your customized group, the pricing information for that group is referenced. If you have any discounts, then they are subtracted from the total, and then they return a quote to you. These companies use software that is pretty complex based on various factors and algorithms of risk and liability. They use the information on your application or from an agent to plug into the software.

Where do all these premiums go?

-70% goes to claims.

-four percent makes up their profit.

-twenty six percent goes to all other expenses.

Why do insurance companies have different rates?

Each insurance company will have different groups with different prices for each, so the rate you pay can vary from group to group. Insurance companies each have their own claim payments and expenses. They use all this information that you provide to set their rate.

What info can affect your insurance premiums?

1.Who you are:

-Your Age

-Your Gender

-Are you married?

-Your Area Code

-Occupation

-Credit History

-How long you have been a driver.

2.What type of vehicle do you drive?

-What year is it?

-The make

-The model

-How many miles you drive per year?

-What are the safety features?

-Price

3.Credentials

-Traffic tickets

-Do you have at least a B average in school?

-Let your policy lapse?

-How many claims you have filed

-Have you ever filed bankruptcy?

-Taken a defensive driving course

-Have you ever had an accident?

4.How much coverage you want:

-Medical payments

-Do you want rental reimbursement?

-Roadside assistance

-Comprehensive and collision

-Comprehensive and collision

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