What factors are considered in ratemaking ?

The characteristics with which the underwriter was concerned are now considered, as rating of your automobile policy takes place.

While each company has its own rating system, there are many similarities. Some of the commonly asked questions and their relationship to loss history include the following:

• Driving Record. You will be asked about accidents and traffic violations incurred by any driver to be covered by the policy during the preceding three (3) years. Drivers with previous violations or at-fault accidents are considered to be a higher risk and may be charged a higher rate.

NOTE: Most companies will insist on rating the policy for all members of the household who have a driver’s license and are not currently insured.

• Territory. The place where you garage your automobile and, therefore, do most of your driving is important in the rating process. Experience shows that more losses and accidents happen in urban areas than in rural ones. There are many reasons for this: more cars and drivers per square mile create a condition where more collisions take place. At the same time there is a higher incidence of theft and vandalism, as well as other crimes such as drunk driving, hit and run, and arson.
• Gender and Age. Statistics show males have more accidents than females and that a higher number of accidents arise from some age groups than from others.
• Marital status. Claim statistics show a lower rate of auto insurance claims among married policyholders.
• Prior insurance coverage. Your new insurance company wants to know about your relationship with your previous company – if you were canceled or not renewed, for instance.
• Use of vehicle. How often and how far you drive the vehicle being insured is important as more frequent use means more opportunity to become involved in an accident.
• Type of coverage and limits of liability chosen. The more coverage you purchase, the higher the premium will be.
• Make and model of vehicle. The type and value of the care you drive directly affects the premium you pay for physical damage coverages. A make or model of car that has a history of a high number of claims for theft or vandalism or high repair costs due to body construction will carry a higher premium than the less expensive auto.
• Credit Scoring. Insurers may use credit history for underwriting and rating purposes in accordance with RI laws. Statistics show a correlation exists between credit history and claim frequency.