Why Do People Get Different Insurance Payments For The Same Coverage?

Why Do People Get Different Insurance Payments For The Same Coverage?

When you are hunting for the best insurance coverage, whether for your car, your home, or your health, you might be surprised to discover that you are offered the same coverage but with different premiums depending on the provider. This is because insurance companies use different factors when preparing your quote. These can be based on their claim experience, the risks associated with your coverage, and their cost of doing business, among many others. 

However, suppose you feel that you are being charged an unreasonable amount every time you go to make a payment. In that case, you should reach out to an insurance attorney who can give you some guidance and negotiate with the insurance company on your behalf.

What Variables Do Insurance Companies Use To Base Your Rate?

Generally, insurance companies will base your rate on several factors. Here are a few of them:

  • The amount of risk that you represent to the company.
  • Your insurer’s operating costs
  • The insurance carrier’s projection as to how much money they will need on hand to pay all claims during the year

Yet, even when the insurance company applies these same variables to every policy, the result may not be identical for every applicant. Every company uses its own formulas to assess risk and determine how much every customer should pay.

How Does An Insurance Company Assess Your Risk?

Insurance companies use different factors to determine how likely you will suffer an accident or loss. Also, some companies place different weight on some factors than on others. Therefore, the result will be a policy payment that will differ from customer to customer depending on the insurance provider and how they weigh each risk factor.

Among the main factors used for a car insurance policy, you may find:

  • Your age
  • Your credit rating
  • Your claims history
  • The make and model of your car
  • Your driving records
  • Where your car is stored
  • Where you usually drive

How Do Statistics Help Assess Risk?

In the case of car insurance policies, insurers analyze statistical data from millions of drivers. They use this information to identify the characteristics of drivers who will be more likely to end up filing a claim. Every claim filed costs the company money. Also, every insurance company collects different information regarding driver types, which may result in their rates being different.

Policy rates are based on groups of people who share the same characteristics regarding age, sex, driving experience, or occupation. If this combination places you into a group that is considered to be low risk, it will likely result in lower monthly payments for you. People who fall into high-risk categories will end up with higher payments.

What Is The Best Way To Save On Insurance?

Since the same factors that insurance companies use to determine your payments are factors that you will not be able to change, such as your age, sex, or driving experience, your best bet when it comes to looking for savings is to conduct an insurance comparison. Take the time to get several quotes and find out which companies offer you the best rates without sacrificing the coverage or the terms of the policy. Once you compare, you will have the peace of mind of knowing that your payments are the fairest they can be.


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