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When it comes to auto insurance, people find it all the same. The only difference most people see is the price. It is true that insurance rates vary and the difference could be a few hundred dollars. There is a reason behind these differences. It is easy to contemplate the difference in rates when it comes to different drivers or different makes of cars. A driver with a decorated driving history would incur a higher rate then a person with a good driving record. A luxury car would cost a bit more to insure then an economy car (especially when comparing full coverage). These are tangible differences consumers are able to grasp. The thing people don’t understand is why different insurance companies provide different rates for the same person, same car, and same liabilities.
Here are five factors to consider:
Rating System: Each insurance company has its own rating system. Each driver may be rated differently. A good driver is characterized slightly differently by each insurance company. A speeding ticket would cost you more in certain companies then others. Some emphasize a certain characteristics and provide discounts for those particular characteristics. It is hard to truly understand what characteristics provides you with the best rate but it is always a safe bet the less points you have on your driving record the better your rates will be.
Existing customers: Existing customers also contribute to the rates of policies. Some insurance companies specialize in accepting and retaining drivers with perfect records. They reject drivers with poor records with higher then normal rates. This means with a collection of good drivers, the company will have less payout and more capital to provide discounted rates. Companies that accept various driving records would have a more stable rate no matter if you are a good driver or not. Your rates would not increase significantly due to a few additional points. But, you will still have high rates no matter where you go if you collect too many points.
Underwriting Guidelines: Underwriting guidelines also play a role in insurance rates. A stricter guideline would mean a driver will have a harder time being accepted. These companies probably have some good rates but to qualify for those rates is another story. Companies with a higher rate would probably have a more lineate guidelines.
Policy Contract: The insurance policy itself can help lower or raise rates. If a company has a policy with more constraints then it would have lower rates. This is because you will probably be limited in what situations the insurance company will actually pay you. A person would incur a higher policy rate when an insurance policy is more beneficial to the insured because it is more likely the policy will payout when an accident occurs. Basically, you are more likely to get money when you pay more for insurance and the opposite applies.
Customer Service: Customer service is also a key factor when it comes to rates. If a company actually cares about you and is willing to use its resources to help when you are in trouble, then you would pay a little bit extra. If a company lacks in customer service then it is more likely you will be paying less for your auto insurance. The savings for not providing decent customer service reflects in your policy rates. So be careful when you choose the lowest insurance policy.
There is a difference among all the insurance companies and their policies. In general, all insurance policies seem similar but a detail inspection may reveal other wise. Make sure you know what you are purchasing and work with a respectable professional that can help explain the many differences among insurance policies.
About the Author:
Reynold Chen is an industry expert in insurance, financing, and real estate. He started as an agent in each field. Through the years, he rapidly gathered knowledge and experience that greatly assist him in his career. Reynold enjoys working with people and educating them. Reynold has partnered up with other industry experts and started Ino-Max Investment Strategies. You can learn more about his companies services at www.inomaxinvestment.com |
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