Insurance Pricing
Pricing an insurance policy is very unique and individualized. What this means that your insurance pricing will not be the same as your neighbor’s. Even if you have the same style home and cars, your auto insurance and home insurance pricing can be very different than that of your neighbor.
The same is true for Business Insurance. Two similar businesses can have different insurance pricing.
There can be thousands of rating tiers in today’s insurance company pricing models.
Insurance Pricing MUST Be Approved By The Sate’s Insurance Commissioner
Contrary to popular belief, insurance companies cannot just charge whatever they want for their insurance policies.
Insurance companies must file their rates and get approval from the state’s insurance commissioner for their insurance pricing.
Some states require that the rates are fully approved prior to the insurance company using the rates for their insrurance policies.
Other states have a “file and use” regulation. This means the insurance company file their rates with the insurance commissioner and start using their filed rates prior to the actual approval of the rates. If the commissioner approves the rates, they continue. If the commissioner does not approve the rates or makes the insurance company make rate adjustments, the company must those adjustments for policies in force under the modified rates and for new policies moving forward.
What Can Affect The Cost Of Your Insurance?
- Previous Claims – Insurance companies look back 3 to 5 years for claims history. Having previous claims will cause your insurance premiums to be higher.
- Location – Where you live can affect your insurance premiums. Companies use claims statistics to determine the insurance pricing for each zip code.
- Credit Score – Depending on the state rules, your credit score can make a difference in your insurance pricing. Insurance companies charge more to those with poor credit scores.
Auto Insurance Pricing Factors:
In addition to the above items, the following factors can affect the cost of your auto insurance (See our blog titled – How are Auto Insurance Rates Calculated?)
- Age
- Gender (in some states)
- Marital Status
- Driving Record
- Type Of Vehicle (Not the color. Don’t believe the myth red cars do not cost more to insure…)
- Vehicle Use
- Annual Mileage Driven
- Coverage Selections
- Deductible Selections
There are also discounts that can be available for your auto insurance. Check out our blog titled – Available Discounts Can Reduce Your Auto Insurance Premiums
Home Insurance Pricing Factors:
Here are additional factors that can affect the cost of your homeowners insurance rates:
- Replacement Value Of Home
- Age And Construction Of The Home
- Distance From Fire Department (determines fire protection class)
- Coverage Selections
- Deductible Selections
- Roof Condition
- Systems Updates (electrical, plumbing, etc.)