Reader question:
Is there anything new that the car insurance companies are doing that might help decrease rates?
Salome
Surprisingly, there is.
In the business world, things are always changing. New ideas flow in and turn systems completely upside down, and this is a constant circle of tide and flow that is natural for any industry. Most of the time, changes are invisible and have little noticeable effect on consumers. Sometimes, like now, when car insurance companies switch things up, the client feels it.
At the moment, insurers are making some changes in the way they price their premiums, and that could mean good news for the average purchaser of car insurance. Before, insurers based the pricing of the premium on only a few factors, which meant that prices didn’t vary much and a small factor could send the shooting up or plummeting down. Now, though, more than thirty factors are considered when figuring out how to price a policy. Within the next few years, most companies will be adopting this way of looking at things.
One of the new changes also is an expansion of pricing tiers among companies. While before, it was normal to have less than ten, now many companies have more than 300. Because of this, drivers who come out well in all of the factors have seen a drop in their premiums of as much as 25%.
Even people who don’t have such great records might come out better. Back in the day, risky drivers were denied by the bigger companies and sent to the unhelpful hole-in-the-wall ones because the big companies didn’t have a way of pricing higher-risk policies. Now, they have room for risky drivers, and generally offer better prices than the smaller agencies.
With differences in premiums of up to $700, it’s hard to call this anything but good news.
Cheers,
Fashun Guadarrama.