Saving Money on Auto Insurance
When it comes to auto insurance, the word frustrationcomes quickly to mind. So do the words anxiety and insomnia. It's not that people feel badly about auto insurance itself. They recognize it as a necessary expenditure. It's the high cost of auto insurance that they are disgusted with, and the fear that the price will continue to go through the roof in years to come no matter what they try to do to stop it.
But first, let's take a look at how auto insurance is priced. Then we'll deal with what you can do to keep your auto insurance premiums as reasonable as possible.
How Auto Insurance Is Priced
Several factors determine the pricing of auto insurance. Some are absolutely legitimate. Some, we believe, are not. Saving that discussion for later, the following considerations are the factors insurance companies look at when they determine the premium you will pay.
Where You live
The single largest factor in 49 of the 50 states (excluding California, thanks to Proposition 103 [see page 127]), and throughout Canada, is the neighborhood where you reside. This concept of pricing is called territorial rating. Here's how it works.
Insurance companies break down the various localities in each state into what are known as territories. Some companies may establish territories by using zip codes, others by neighborhood, town, or county.
However the territories are determined, companies use their statistical-gathering abilities to compute the rates of auto insurance claims within each established region. The insurance industry's reasoning for this pricing mechanism is the fact that most accidents occur within a few miles of where the vehicle is garaged. Thus, the companies believe that territories provide an accurate basis for determining their risk., the price of insurance is based on the risk of loss to the company.
From these statistics, the underwriters then determine the risk of loss for cars garaged in each territory. Once this has been done, they determine a base rate for each territory. The base rate is the starting point from which each person's actual premium will be established.
Knoxville car accident attorneys Car accident lawyers in Knoxville TN , Gilreath and Associates represents clients involved in auto accidents in Bristol TN and Knoxville Tennessee.