No matter what type of insurance you are looking for, the rates you receive will be based on your level of risk. Since insurance agents are making an attempt to predict the possibility of you filing a claim, they use a variety of statistics to come up with a policy and rate that is fair and reasonable. Every person who applies for a policy will be evaluated for their level of risk as well as how they compare to statistical information that is gathered by outside sources.
It’s important to understand what risk is and how it is applied to the insurance process. When a person buys a home, there is always the possibility that a fire may break out or a burglary may occur. The same is true for vehicles. The possibility of an accident is always present. The probability, however, is what determines risk. The degree of probability is determined by closely studying statistics to see what factors are present for each type of risk. Once this is determined, the information is used to define individual rates and premiums for each type of insurance.
Factors That Determine Risk
Driving statistics provide extensive amounts of information to insurance agents. There are many different factors that determine risk. Driving statistics are categorized by these factors. One of the first determining factors is age. It has been proven through the use of statistics that drivers who are between 16 and 24 years of age are involved in more auto accidents than all the other age groups. Another high-risk age group is individuals over the age of 70. Older drivers take longer to react and may not be able to avoid an accident in time.
Other factors include time of day, location, and driving conditions. While some of these may be out of your control as a driver, they are still factored in based on where you live and your overall driving history. To determine an accurate representation of your risk, all of these factors will be used to create a driver profile and risk assessment. With this information, an insurance agent can determine your level of overall risk and provide you with the best possible policy.
Reducing Risk for Better Rates
Statistics always play a vital role in the insurance process. That doesn’t mean they are the only determining factors that are included. You also have options that you can use to reduce your risk and earn lower rates by offsetting those risk factors. A few of the best risk-reducing strategies available for you to include:
● Student Discount options – If you have a student in your home that steadily earns good or above-average grades, you may qualify for what is known as a “Good Student Discount”. This applies to students who excel in school and who have shown responsible behavior in terms of homework and other school-related activities.
● Defensive Driving Class – Insurance companies and law enforcement agencies offer defensive driving courses for individuals who may need a refresher course. While some people may sign up for a class after they have received a ticket as part of their fine or punishment, others can sign up for a class at any time for earning credits to lower their auto insurance premiums.
● Bundled Policies – Insuring more than one vehicle and applying a multi-car discount or bundling your home and auto policies are also good ways of showing stability and financial responsibility. Both of these situations will earn you a discount on your premiums and also make it much easier to manage all of your insurance obligations.
At Pittman Insurance Group LLC, every agent is highly skilled in evaluating your needs and coming up with the right policy for you. We will identify any potential risk factors and work to find the best possible insurance for your exact needs. Schedule an appointment today!