“Insurance companies assume a risk when proving coverage to a person. In order to calculate how likely is for a person to file a claim, insurance companies analyze multiple factors”, said Russell Rabichev, Marketing Director of Internet Marketing Company.
LOS ANGELES (PRWEB) August 17, 2020
Insurance companies rate clients and place them in 3 main risk categories: Preferred, Standard and High-Risk. Multiple factors are analyzed in order to assess a client’s risk profile. The main factors that influence car insurance rates are the following:
- The area where the policyholder lives. Car insurance rates are calculated based on the customer’s ZIP code. Each state has a certain car insurance legislation. This includes minimum liability coverage, laws regarding no-fault coverage, reimbursement limits, when a car is considered totaled and other relevant issues. Furthermore, the ZIP will tell the insurer if the client lives in a metropolitan area or a rural area. Car theft frequency, riots and reports of vandalism for a specific area taken into consideration. The geographical layout and position influence rates for certain coverage types. For example, people living in coastal areas, more exposed to hurricanes, pay more expensive comprehensive coverage.
- Driving history and recent traffic violations: As expected, people with clean records have better rates. Companies prefer to work with drivers that have not been involved in accidents in the past 3-5 years. A person with multiple traffic violations or accident involvements may be seen as high-risk.
- The car’s make and model: When asking for coverage, the client must provide the following basic info about the car: fabrication year, make, model, sub-model (body type). Furthermore, the driver will be asked if the car is equipped with crash avoidance technology, anti-theft devices or recovery devices. The type of car and its value also influence the cost. Expensive, sports car that cost a lot are more expensive to insure.
- Credit score: Drivers with poor credit scores are considered a higher risk by many insurance companies. Persons with a poor FICO score should consult experts in order to develop a strategy for repairing the credit score.
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