Reader’s Question:

How do I know the factors that insurance companies use in computing for vehicle insurance rates?

Andrew

Tulsa, OK

The best way for you to know what factors insurance companies use in computing for vehicle insurance rates is to ask them directly about it. For sure, they will tell you what factors they consider, but they will never discuss with you the weight they give to each of these factors. Insurance rate computation is a bit complicated, especially for those who don’t know anything about it. That’s why most vehicle insurance companies don’t bother discussing the hairy details of their computation to their clients.

In general, vehicle insurance companies consider almost the same factors, mostly about the client’s personal profile. This includes the age and gender, home address, household members (housemates), marital status, occupation, and place of work. Previous records about the client are also taken into consideration. These include records on violations made, accidents involved into, claims filed, credit standing at a certain point in time (also referred to as a snapshot), and insurance coverage availed in the previous years. The type of vehicle insured is also taken into consideration, as well as its mileage. This is often associated with how the car is intended to be used. Often, those which are intended for business use or for school/work service are given higher vehicle insurance rates because they are expected to have longer mileage than those which will be used for pleasure (such as for occasional trips).