What Price Factors Are Used by Vermont Auto Insurance Companies?
In the state of Vermont, insurers use what are known as "price factors" to classify drivers and charge them accordingly. Companies set premiums by using rating classifications that are developed by determining the risk of insuring potential policyholders who fall into certain classes. Residents should be aware that these rates do not require state approval prior to use, and it is up to motorists to shop around and find the best deal.
Breakdown of Price Factors
Garaging address: Companies divide the state into what are known as "rating territories.” By analyzing statistics of certain areas, insurers gain better knowledge of the risk involved in insuring vehicles in particular geographic locations. This information is then used to create the territories and calculate a portion of the premium. Often more congested and urban areas pose higher risks to insurers than rural areas.
Driver: The age, gender, and even marital status of a driver can all play a part in how much he or she pays for coverage. For example, a married woman in her 40s could end up paying much less than a 22-year-old single male for the same product.
Driving record: A driver's record can have a big impact on the cost of a policy. Drivers are usually placed in one of three classifications: preferred, standard, or nonstandard. Preferred drivers are usually classified as such because of a clean driving record, while a nonstandard driver often has a number of accidents or violations. Generally, nonstandard drivers pay a fair amount more than preferred motorists.
Vehicle: Insurers have access to statistics regarding the risk involved in insuring certain makes and models. The factors used to determine the risks of covering vehicles include value, repair costs, accident frequency, and theft rate. The more likely a vehicle is going to suffer a loss and the higher the severity is likely to be, the costlier it usually is to insure.
Vehicle use: Motorists who use their vehicles to commute will often pay more than those who use their automobiles strictly for pleasure. Drivers who commute to and from work usually drive more than those who do for pleasure, and they tend to do so in more congestion.
Credit scoring: Insurers have been using a consumer's credit history as an indicator of risk. Although many argue that a person's credit has little to do with auto insurance, studies show that there is a direct correlation with a person's credit-worthiness and his or her likelihood of filing a claim.
As consumers can see, a lot of details go into what a person can expect to pay for coverage. Motorists should be aware that Vermont car insurance companies target different clientele and can offer each driver a rate that can be significantly different from another. In addition, price factors hold varying weight among carriers. The most effective way for a motorist to find the most affordable rate is to take the time to comparison shop.