Q: What really determines the cost of auto insurance?
A: Carriers determine auto insurance rates based on the following in order of importance.
Credit Driving Record Prior Insurance History Driver Age & Marital Status Prior Insurance Limits Vehicle Geographic Location
1: CREDIT
Unfortunately credit is usually the largest factor when insurance companies price your insurance. As an agency, we don’t see an actual credit score when quoting. Companies use credit score to help determine what pricing tier a person fits into when rating. While some companies have 10 or less tiers, other companies may have as many as 50 tiers for rating. Although a credit reoport is obtained, it is usually a soft hit, meaning it does not affect your credit score and it does not show up on the actual credit report.
Of the eleven (11) carriers we represent, ten (10) use credit as a factor in their rating. The same credit score can be looked at very differently among insurance companies. Some companies may need a 800 credit score or better to get their best pricing. While a other companies offer their best pricing at a score of 720. As agents we’ve found that there is a company for everyone.
Insurance companies call credit scores an insurance score. The better your insurance score with a company the better your pricing. Other factors like the next items listed also work to determine an insurance score, but usually credit is the largest factor.
2: DRIVING RECORD
It’s no surprise that tickets and accidents affect your rates. In regards to car insurance Cape Coral, it is ranked as second in order of importance to insurance pricing. At fault accidents usually hold more weight in raising rates than speeding tickets. Often individuals with a speeding ticket that very good credit, get penalized very little in regards to pricing.
Most auto insurance companies look at an tickets and accidents you may have had over three (3) years with most insurance companies. Whil only a few companies look at your driving record up to 5 years.
Tip: If you get a moving violation, try to take the class offered by the state. If you take the class the violations really don’t show up on your driving record.
3: PRIOR INSURANCE HISTORY
If you haven't had prior insurance, no company is going to give you their best rate. Most companies don’t give you their best rate until you’ve had insurance for at least one year. When companies run your driving records, they are also usually able to find out who you have for insurance, what limits you have with them, and how long you’ve been with that insurance company.
4: DRIVER AGE & MARITAL STATUS
Most companies don’t allow drivers under the age of 21 into their preferred insurance tiers. For parents with young drivers rates defiantly are higher with kids under 21 on the policy. For drivers under 21 to be on an insurance policy by themselves rates are most often higher than if the young driver had their own policy.
After 21 the next break for insurance is usually 25. Once a driver becomes 25 most companies offer drivers into the insurance companies cheaper insurance tiers. If a driver is between 21 to 25 and married rates also go down a little usually. Also at any age being married usually is a small discount over when you are single. Some companies will also give discounts to single parents, over the age of 21. We have two companies that offer those discounts.
5: PRIOR INSURANCE LIMITS
Prior insurance limits are the amount of insurance a company might pay if you are sued for injuring someone in an accident. This is called (BI) Bodily Injury Converge. Coverage limits usually look as follows:
10/20 25/50 50/100 100/300 250/500
The higher your liability limits with your previous carrier, the more discount you get with a new insurance carrier.
Also in Florida drivers aren’t required to carry (BI) Bodily Injury Coverage. The state only requires that a person carry (PD) Property Damage and (PIP) Personal Injury Protection.
Also if you don’t carry (BI) Bodily Injury Coverage, most companies will not give you credit for having prior insurance. Drivers who only carry the actual state minimum coverage, almost always are only allowed into a companies risk insurance pricing tiers. Our advice is to at least carry 10/20 of (BI) Bodily Injury Coverage to make sure you can get into companies preferred insurance pricing tiers. Coverage’s Explained.
6: VEHICLE
Vehicles with airbags and antilock brakes obviously are eligible for better insurance rates than vehicles with out these safety features. Also the 17 digit vehicle identification number (VIN #), is also set up to show what standard safety features a vehicle has.
Also the cost to replacing the vehicle factors into insurance rates. A $100,000 Mercedes is going to cost a little more to insure than a $15,000 Kia. The price difference between a very expensive vehicle to a much lesser costing vehicle is usually very little.
Some companies still rate a little more for high performance vehicles. Over the last years high performance vehicles aren’t as much of a price increase as they had been in years past.
7: GEOGRAPHIC LOCATION
Areas of heavy population are usually a little more expensive than areas of small population. Also drivers moving to Florida from different areas in the country often see a change in insurance pricing. In regards to auto insurance Florida usually has pricing in the middle, compared to other states where rates are extremely high, or extremely low.
Also one company might be very competitive in a certain zip code, and then in other zip codes in the same area their pricing might not be as competitive.
SUMMARY
Again credit and driving record usually are the largest factors in insurance pricing. Of our 11 companies each company has a little different appetite to what they look for in determining their rates. Having lots of companies to choose from, really has been an advantage to linking clients with the best priced company for their situation.