The writers at Online Auto Insurance discuss insurers’ use of geographic factors in calculating premiums.
Online PR News – 19-October-2010 – – In an effort to make sure that losses are contained to manageable levels, auto insurance companies look at a variety of variables and use complex formulas to assess driver risk accurately and to set suitable premium rates for policyholders. In the newest FAQ, the writers at OnlineAutoInsurance.com look at why insurers take a motorist’s geographical location into account when determining rates.
Consumers who attempt to figure out on their own how much is car insurance going to cost will likely run into some difficulty. That’s because the significance of some factors — like geographic area, credit history, marriage status, etc. — is hard to discern.
Although some might presume driver history to be the best indicator of future habits, factors like credit history and the principal place that a driver garages his or her vehicle actually have proven to be better predictors of claims trends.
In the most general capacity, whether a territory is considered rural or urban can tell observers something about what the insurance loss records may be like for drivers in those areas. Less-populated rural areas may have fewer drivers per geographical unit, less traffic, fewer accidents and, in turn, fewer claims. Super-populated urban areas may have opposite influences and claims trends. There are exceptions to this, however.
Additionally, carriers writing comprehensive insurance, which covers policyholders if their vehicles are stolen or damaged from incidents besides collisions, may look to geographical area to evaluate theft and vandalism rates in order to assess the likelihood that they will have to pay out on such claims.
To learn more about geographical area’s influence on premiums, readers can access the full FAQ at http://www.onlineautoinsurance.com/ where visitors will also have access to the free online quote-comparison generator.