How are Car Insurance Rates Determined, and How do they Affect Claims?

When you decide on an auto insurance provider, they evaluate a variety of factors which are supposed to indicate your likelihood of being involved in an accident. Some factors, like your driving history, are directly related to your safety as a driver. Other factors, such as your place of residence, are based on statistics and may seem to have less of a direct correlation with your actual driving abilities. If you are involved in an accident and file a claim, your insurance company may look at similar elements in their evaluation of fault and your coverage.

Driving History as a Determination of Rates

Primarily, insurance providers look at your past collisions and traffic violations to decide on your rates. Drivers who are deemed as more likely to be involved in an accident pay more, and drivers who are deemed as less likely to be involved in an accident pay less. Insurance companies base their decision on the probability that they will need to pay a claim to you later. Your driving history is one of the best indicators of that probability.

How Demographics Factor In

Your age, sex, place of residence, credit score, and type of car have just as much of an impact on your car insurance rates as your driving record. Insurance companies evaluate the accident statistics of other people who, for example, are the same age as you and drive the same car, and use that information to determine your rates. It may seem unfair, but it is a reality of the insurance industry. However, auto insurance providers are legally prohibited from using race or religion as a factor in setting their rates.

Will you Be Covered After an Accident?

It is difficult to determine whether or not your claim will be paid if you are involved in a collision. Although you may think that your record as a safe driver should be cause for the insurance company to cover you, that is not the case. Or, if you are on the opposite end and pay a lot for car insurance because you were identified as an unsafe driver, that will also not affect your claim. Regardless of whether you have driven safely in the past or pay a lot of money in the hopes that you will be covered, claim acceptance is based on each individual situation and cannot be determined ahead of time.

There are a number of reasons why your insurance provider could deny your claim — the attorneys of Chung & Ignacio, LLP are here to help. After a car accident, call us for assistance with recovering compensation for your injuries.

To schedule a free consultation with our legal team, complete our contact form or call (909) 726-7112.