Statistics reveal risk and insurance premiums to be charged
How well you know your Insurance agent has no effect on the terms of the policy you purchase from him as it used to be in days gone by.
In the days before computers, auto insurance was personal and a policy was individual. Your agent could call in some favors from his colleague in head office to obtain better insurance premiums for you. It was a given that male drivers under 25 paid high premiums and young females were considered as lower risk and charged less.
Nowadays, insurance companies have large databases containing accident and claims records. By calculations, these records will reveal the type of person likely to be a safe driver and the one likely to be an accident risk.
Generally called ‘Black Box’ technology, it provides the understanding of the background and conduct of people, they think should pay higher insurance premiums. For example, people with less responsibility are actually of higher risk than those with higher liability. Statistics have shown that the bearers of bad credit scores are more likely to be involved in accidents.
How are auto insurance premiums determined?
It is a toss of the dice between staying competitive by comparison and making the best profit for shareholders. Now that they have ‘Black Box’ technology, auto insurance companies are scrutinizing every driver. Credit score, career, past record, even the city you live in have an influence on your rates.
Selecting low limits of liability has proven you to be higher risk than those who select higher limits. That means you could lower your auto insurance premiums if you raise your liability limits.
In some cases the new ‘Black Box’ technology reduced rates by up to 20% compared to companies that aren’t using it. Unfortunately, credit scores play a part in ALL auto insurance rating. A bad credit score results in higher insurance premiums. You won’t have the advantage of ‘discounts’ or ‘loyal customer’ credits any more. You will be rated right down to your shoe size, counted amongst drivers like you, and charged consequently.