Understanding Your Rate: Key Factors Affecting Insurance Premiums

In today’s economy, everyone wants the best rates on insurance. To understand what it takes to get the very best rates – and to keep them low – you must understand what goes into calculating your insurance policy premiums. Here are some of the primary factors that determine personal auto and commercial property insurance costs:

Your Location

The geographic location of your home or property determines the likelihood of loss. Accidents, theft, vandalism, and severe weather such as flooding or hail are more common in some areas than others. Individuals and companies in these areas will pay higher insurance rates.

Your History

Past accidents and violations affect your current auto insurance rates. Insurers look at the number and severity of incidents you’ve experienced to determine your risk. In the same token, insurers look at the number of claims made by commercial property owners to determine those insurance rates.

Both individuals and commercial property owners should talk with their insurance agent before filing a claim. Some incidents may be better handled by the client, as a number of these claims could negatively affect your premiums over the long term.

The Number of Policies

Insurers reward the loyalty of their customers with multi-policy discounts. Bundling your personal or commercial insurance policies could dramatically reduce your overall insurance costs. Additionally, it allows your insurer to fully understand your insurance needs, and helps to protect you from potentially costly gaps in insurance.

You (or Your Employees)

A number of personal factors help to predict an individual or a company’s potential risk for damage or theft.

Age, gender, profession, and even marital status are all considered to determine personal auto insurance rates. Each of these factors is correlated to a statistical risk. Taken together with your location and your incident history, they help to calculate your insurance rates.

In determining insurance rates for your company, your insurance agent will consider the type and size of business you own and the way you operate. The individual risks of your employees may also be considered, particularly if you are insuring a company vehicle.

The formulas used to calculate your insurance rates vary from one insurer to another. It is important to talk with your provider to better understand your rates. The experts at the Insurance Association of Baton Rouge are available to answer your questions and help you explore your personal and business insurance options. Call or stop by our office on Government Street to learn more.

What factors have affected or changed your insurance policies? Have you found ways to save?

Source: DMV.org “Factors that Affect Car Insurance Rates” http://www.dmv.org/insurance/car-insurance-rate-factors.php

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