How Do Car Insurance Companies Rate Drivers

When a driver applies for coverage, the insurance company considers a number of factors to decide how much to charge him or her for this protection. The process of gathering information about an applicant and placing him or her into a category is known as underwriting. The rating that a driver is given has a direct bearing on whether a particular insurance provider will agree to extend coverage to a particular driver or turn down his or her application.

Standard Car Insurance Rating

The majority of drivers will be classified in the standard category. This is where drivers who are considered to present an average level of risk will be placed. A person can remain in the standard category if he or she has been involved in one or two accidents or has accumulated some moving violations over several years of driving.

Non-Standard Car Insurance Rating

Being classified as non-standard is not something that any driver will want to aspire to when looking for coverage. This classification is for high-risk drivers, and they are charged higher than average rates for their coverage. Since each car insurance provider determines how much risk it is prepared to assume on behalf of an insured driver independently, some companies will refuse to issue a new policy or to renew coverage for a non-standard driver.

Young people may be placed in the non-standard category by their insurance company when they obtain a license to drive. Insurance companies know that young drivers are more likely to be involved in an accident and are charged more for their coverage due to the higher level of risk that they present. By the time a person reaches his or her mid-twenties, his or her premium rates should start to come down to a more affordable level.

People who have been involved in a serious at-fault accident or have been accused of an impaired driving offense may be placed in a non-standard auto insurance category. A driver may need to seek coverage from a company which specializes in insuring non-standard drivers.

Preferred Car Insurance Rating

For a driver to be placed in the preferred category for car insurance coverage purposes, he or she needs to be a careful driver who has never been involved in an at-fault accident over the years. All premiums must need to be paid on time, as well, since being late with payments or having a car insurance policy cancelled for not making them as agreed will likely result in the driver’s rating being downgraded to standard (or even lower).

The category that a driver is placed in will probably be listed somewhere on the policy documents. If a driver has any questions about why he or she is in a particular category, contacting the customer service department at the insurance company should help to clear them up. It’s a good idea to ask if the policy is renewed and the rating category has been changed so that the policyholder can understand why the insurance company took that action.