Insurance companies use different factors when determining premiums for a specific type of insurance policy. This can include automobile insurance policies, health insurance policies as well as a homeowners insurance policy. Many factors are similar from one type of policy to another, however certain policies have special requirements such as driving history and claims history that are factored into the premium.
Insurance companies use an individual's credit score as a basis for insurance scoring. An individual's credit score is obtained from a credit bureau which is converted to a score that is then applied to an automobile or homeowners insurance policy. Insurers think that they can can gauge an individual´s likelihood of claims against their insurance policy based on a person's credit score. Your credit score thus will increase or decrease the cost of your insurance policy.
Age is a factor that insurance companies use to determine the premium for automobile or homeowners insurance policies. Mature and youthful drivers' age is used to determine insurance rates. The age of a home is also used on a homeowners policy to determine how much it would cost to rebuild the home if it is damaged or destroyed.
The premium determination for an automobile, homeowners and even life insurance is based on the amount of coverage on the policy. Coverage amounts can vary depending on the type of policy that is needed. The higher the coverage on a particular policy, the more it will cost because the insurer will have to pay more in the event of a loss. The type of coverage also can affect the price if, for example, you want to have replacement cost in a homeowners policy.
The deductible is the amount that an insured individual must pay before benefits are paid on a policy. Automobile, homeowners as well as health insurance policies require a deductible . The typical deductible can range from $250 up to $1,000 or more depending on the type of policy. The higher the deductible an insured individual chooses, the lower the cost of the policy because an insurer will have to pay less when there is a claim.
An individual's driving history is used specifically when determining the premium for an automobile insurance policy. An insurer will use a Motor Vehicle Report or MVR of a driver to see there are any traffic violations. Traffic violations in an MVR are used by an insurer to calculate the premium for a policy. Insurers will use violations that go back between 3 and 5 years depending on the severity of the violation.
Cameron Easey has over 15 years customer service experience, with eight of those years in the insurance industry. He has earned various designations from organizations like the Insurance Institute of America and LOMA. Easey earned his Bachelor of Arts degree in political science and history from Western Michigan University.