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There are all sorts of factors that insurers take into consideration when determining your insurance rating. Your rating directly impacts how high your monthly insurance premium is going to be. The Colorado Department of Insurance provides the following information regarding your ratings and insurance company policies.
FAQ By Insurers to Determine Your Insurance Rating
Driving Record
On the application, you will be asked about your previous driving
record. Insurers will ask about accidents and traffic violations for any driver covered by the
policy for the preceding 3-5 years. Drivers with previous violations or “at fault” accidents are
considered to be a higher risk and are charged a higher rate.
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Territory
The claims experience in your geographical area will also affect your rates.
Applications include a question that asks for the address where the vehicle will be garaged.
From this information, insurers assign you to a territory whose rate is based on historical
experience for that territory. Generally, more claims are made from urban areas with tendencies
of busy traffic, thefts, vandalism, etc., than from rural areas.
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Gender and Age
Statistically, males have more accidents than females. For this
reason, men may tend to pay more for insurance than women. A small number of states have
prohibited insurers from using gender as a factor in underwriting; however, Colorado allows this
type of rating. Insurers also have statistics that show a higher number of claims for some age
groups than for others. For these reasons, young men tend to pay more for insurance than
young women, and a person under 25 will pay more for insurance than a person of age 35.
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Marital Status
Statistics show fewer auto insurance claims among married
policyholders than unmarried policyholders.
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Prior Insurance Coverage
Insurers may ask if you have previously had insurance
coverage because they want to know if you have been canceled for non-payment of premiums
or other reasons. If you have had insurance, your prior company can tell the new insurer about
your claims history or the company may request a C.L.U.E. (comprehensive loss underwriting
exchange) report, which will provide your claim and/or motor vehicle record history.
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Vehicle Use
You may be asked on the application how often and how far you drive the
vehicle that you want to insure. Greater use will generally result in higher premiums due to the
increased exposure to risk.
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Make and Model of Vehicle
The type of car you drive will directly affect the cost of
comprehensive and collision coverage. A make or model of car that has a high number of
claims or higher claims cost will be charged a higher premium.
Factors That May Result In Insurance Rate Discounts
Multiple Vehicles
Most insurance companies offer a discount to consumers that insure
more than one car with their company. Companies offer these discounts not only because they
want all of your business, but also because it is easier for them to underwrite individuals that
they know, thus reducing their risk and saving them money. In addition, industry statistics show
that individuals and families that insure more than one car have better than average claims
experience. Through this discount, companies pass along some of their savings to you.
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Driver’s Education Courses
Discounts for driver’s education courses are targeted
primarily at younger and older drivers. In Colorado, all insurers must provide for a reduction in
premium for a three-year period for people aged 55 and above if they successfully complete a
driving course approved by the Department of Motor Vehicles and Public Safety. The insured
must maintain a clean driving record in order to keep the discount. One of the driving courses
offered is 55-Alive and is sponsored by the American Association of Retired Persons (AARP).
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Good Student
Insurers have found that students who are responsible enough to earn a
“B” average or better tend to be more responsible drivers. For that reason, many companies
offer a good student discount.
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Safety Devices
Automobile safety devices can lower insurers’ costs by preventing
accidents or limiting their severity. These savings are passed along to the policyholder through
discounts for safety equipment. This equipment includes air bags, automatic seat belts and
anti-lock brakes.
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Anti-Theft Devices
Devices or systems that deter theft or vandalism also lower claims costs. Many companies offer discounts for anti-theft devices.
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Low Mileage
The fewer miles you drive, the less chance you have of getting into an accident. Insurers recognize this fact and generally offer discounts for low mileage drivers. Some companies also offer discounts for drivers that participate in car pools.
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Good Driver/Renewal
Some insurers offer discounts to drivers who maintain a good driving record and renew their policy with them.
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Auto/Home Package
Some insurers offer a discount on one or both policies if an individual buys a homeowner policy and an auto policy from the same insurer.
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Dividends
Some insurers, particularly mutual insurers, offer dividends to policyholders if the sale of auto insurance has been profitable to them. Dividends are declared and paid after the policy expiration.
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Click on the links for more information about Colorado auto insurance or Colorado auto insurance quotes.
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