Insurance companies go through two steps in determining your auto insurance
premium: underwriting and rating. The process of underwriting groups
together applicants who present similar levels of risk. If you have a low level
of risk you will be grouped together with other low-risk drivers. Rating
is the process of assigning specific costs for specific coverages for each
group. Groups with higher losses will have higher rates. Rates are set based on
statistics accumulated through the years on groups with similar
characteristics. Three general rating groups exist: (1) preferred insured
(low-risk); (2) standard (average risk); and (3) nonstandard (high risk). State
insurance departments regulate the rates set by insurance companies. This
protects consumers and ensures fair pricing.
Many factors come into play during the underwriting and rating processes.
Remember, no single factor determines whether your premium will be higher or
lower than another person’s. All rating factors are taken into consideration
when determining premium.
Here are a few things that Penn National Insurance takes into consideration.
Driving Record. One of the first questions your Penn National Insurance
agent will ask during the application process is “Have you or any driver
covered by the policy had any accidents or violations in the past 3 years?”
Statistics prove that drivers who have a history of violations or at-fault
accidents run a higher risk of future accidents and violations.
Geography. Where you live also comes into play. Underwriters look at the
claims history for the area where you live. Urban areas generally result in
higher risk of accidents, theft and vandalism than rural areas; accordingly, a
higher rate is assigned to drivers in urban settings.
Your Vehicle. Vehicles that have good safety performance and safety
features (antilock brakes, airbags, and others), and a low incidence of
accidents present a lower risk and will receive a better rating than
higher-risk vehicles. Insureds will be rated higher for vehicles with a poor
accident record or those that do not perform well in crash tests. To find out
about the safety performance of your car, visit the Highway Loss Data
Marital Status. Statistical data collected through the years show that
unmarried people have a higher claim rate than married people. So insurance
companies assign lower rates to married people than to single adults.
Age and Gender. Male drivers and younger (under the age of 25) drivers
tend to have more accidents than female drivers and older drivers. Because
these groups present a higher risk, they generally will be rated higher and pay
more for insurance.
Vehicle Use. How you use your car will affect your insurance rates as well.
Your Penn National Insurance agent will ask you if you use your car for
business, pleasure, commuting or for farming. The agent will also ask you
approximately how many miles a year you drive. The more you drive, the greater
your chances of being in an accident. People who drive frequently will be rated
differently than those who drive infrequently. You are obligated by law to
respond truthfully to your agent’s questions. Doing otherwise constitutes
insurance fraud, which can bring large fines and even jail time.