The most important factor to consider about insurance ratings is how the policy determines the rate. Two major factors that affect the how much policyholders pay for insurance are underwriting and the rating system that a company adopts, according to InsureUonline.org.Continue Reading
The purpose of underwriting is to assess the level of risk and to group it with similar risk. Most insurance rating systems are influenced by the claim frequency. This is the measure of the number of how many times an insured event has happened within a specific group in relation to the number of policies that group has, as InsureUonline.org explains. In short, insuring within high claim groups costs more compared to those of low claims.
There are other factors that also affect insurance rates. For instance, for motor insurance, if the owner���s driving record is characterised by violations and accidents, the risk is higher. Geographically, urban areas have higher claim frequencies than rural areas. Male drivers are more prone to claims compared to female drivers, and older drivers have fewer risks compared to younger drivers, states InsureUonline.org.
Marital status is also considered when determining policy rates since married people have fewer claims compared to single people. Previously being dropped from a policy for not paying the premium can also lead to higher rates because of higher risk. Luxury vehicles also have higher claims, and a longer average mileage increases the risk of claims, according to InsureUonline.org.
Because they are entering into a legal contract, insurance customers should read over them carefully to ensure full understanding of the rights of the company and the insured, according to InsureUonline.org.Learn more about Insurance