Information Commonly Requested By Insurers for Rating

Information Commonly Requested By Insurers for Rating

1. Driving Record – On your policy application, you will be asked about your driving record. Insurers will ask about accidents and traffic violations for any driver covered by the policy for the preceding three to five years. Drivers with previous violations or “at-fault” accidents are considered to be a higher risk and are charged a higher rate. Also, the insurer likely will request a motor vehicle report from the Department of Motor Vehicles (DMV) to compare against your application. Some insurance companies offer “accident forgiveness” to certain insureds who meet the eligibility criteria that can vary from insurer to insurer. This feature is offered either as part of a standard auto insurance policy or as an additional coverage option (endorsement). These options generally have additional charges associated with this benefit. Accident forgiveness means that if you are responsible for causing an accident, your premium will not increase due to that at-fault accident.
2. Territory – The claims experience in your geographical area also will affect your rates. Policy applications include a question that asks for the address where the vehicle will be garaged. From this information, insurers determine your territory or zip code whose rate is based on historical experience for that territory or zip code. Generally, more claims are made from urban areas – because of tendencies of busy traffic, thefts and vandalism – than from rural areas.
3. Gender and Age – Statistically, males have more accidents than females. For this reason, men may tend to pay more for insurance than women. 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 35-year-old.
4. Marital Status – Statistics show fewer auto insurance claims among married policyholders than unmarried policyholders. Generally, married people pay a lower premium than unmarried policyholders. Nevada law requires domestic partners to be rated as married policyholders.
5. Prior Insurance Coverage – Insurers may ask if you have previously had insurance coverage, because they want to know if you have ever been canceled (such as for non-payment of premiums), or if you have ever had any lapse in your auto liability coverage. Under Nevada law, if insurers ask for this information, they are required to also ask about the reasons for any previous cancellation, nonrenewal, or adverse underwriting decision. Insurers may not refuse to insure you or increase your premium solely on the basis of the fact that a previous insurer has cancelled or refused to renew your coverage. However, an insurer may seek additional information regarding such a previous decision, and this additional information may be a factor in the insurer’s own underwriting or rating decisions.
6. Vehicle Use – You will be asked on the application how often, how far and for what purpose you drive the vehicle that you want to insure. The fewer miles you drive the less chance you have of getting into an accident. Some insurers also offer discounts for drivers who participate in car pools.
7. Usage-Based Insurance (UBI) – UBI is a relatively new methodology in the pricing of auto insurance which is being offered by certain insurers in Nevada. This methodology allows for discounts in your auto insurance premiums based upon the number of miles you drive. Some companies require a device to be attached to the On-Board Diagnostics (OBD-II). This telematic device transmits mileage and other information to the insurer. Other insurers require scheduled “odometer reading” by the agent or other representatives of the insurance company to verify the mileage. The technology behind the telematic device has generated some concerns regarding the potential for violation of privacy rights by tracking of movement of those who install the telematic device in their vehicles. The programs approved for use in Nevada do not utilize GPS technology and cannot track the exact location of the user.
8. Make and Model of Vehicle – The type of car you drive directly affects the cost of comprehensive and collision coverage. It also can affect the cost of bodily injury and property damage liability coverage. A make or model of car that has a high number of claims or higher claim costs will be charged a higher premium. High claims costs are generally associated with two types of vehicles: higher-valued vehicles, which are more expensive to repair, and vehicles that have shown a higher severity of bodily injury losses or physical damage losses in an accident.

The single greatest influence on the rating process is claim frequency. Claim frequency measures how often an insured event occurs within a group relative to the number of policies contained in that group. It does not mean how many times you have made an insurance claim, although that will have an additional effect.

If you share characteristics with a high-claims group, you will be charged more for insurance coverage. At the same time, people who share characteristics with low-claims classes will be charged lower rates. However, it should be noted that the greatest controllable factor in determining your rate is your driving record. A person with a clean driving record will pay less than a driver with similar characteristics who has traffic violations.

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