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If Car Insurance Companies Penalize You For ANY Accident, Why Do They Ask If You Had Any “At Fault Accidents?”
Aug 31, 2020
Several Factors Influence Your Car Insurance Rates.
Claims history is one of the major rating factors that insurance companies use to determine auto insurance rates in most states.
Though not-at-fault accidents may not result in a state-mandated surcharge, they can, and are used to determine what is called by insurance companies “tiering”, or “tier placement”.
Auto insurance company’s rating schemes may utilize dozens of “tiers” ranging from lower to higher rates depending on which of those “tiers” an insured qualifies. Accident frequency and/or severity has a significant influence that determines the rating tier in which an insured will be placed.
Though every insurance company uses a different rating algorithm, one can rest assured that fewer claims, regardless of fault, will benefit them when seeking the best rate.
If you’d like to geek out on information related to the use of accidents and rating tiers see this article by the Casualty Actuarial Society here: 2010 CAS Spring Meeting - Balancing Rate Competitiveness and Rate Stability with Rating Tiers - A Case Study for Personal Auto Insurance.
The use of tiering makes the strategy of utilizing higher deductibles and self-insuring for smaller losses a wise strategy to save money on auto insurance now and into the future.
Do you have additional questions about how to optimize your auto insurance coverage and minimize your premium? We LOVE to help! Please feel welcome to call us by dialing (607) 324-7500. To find the Ryan Agency office nearest you, please click here.
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