An Interview With An Actuary
It’s easy to lower your Tucson auto insurance premiums, if you know what you are doing. But, since most people don’t spend a lot of time thinking about insurance (or at least we hope not), we’ve asked an actuary (those math guys who are the brains behind insurance pricing) how we can ‘game the system’. The goal is to help you pay the very least amount for your car insurance in and around Tucson (or anywhere else, for that matter).
Q. How are auto insurance prices determined?
A. Each insurance company prices slightly differently, so it does pay to shop around. However, there are definitely some similarities to pricing as well. For many years now, insurers have lumped people together into ‘homogenous’ groups. That is, into groups of similar type people. This allows for enough loss history to develop credible rates. Any one person can have a random accident, but lumping a whole lot of similar people together allows actuaries to use averages to develop rates.
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Q. So a lot of what you pay is based on the experience of the group you are in?
A. That’s right. So for example, you may be the safest 18 year old male driver in the world, but you are going to pay an arm and a let simply because on average, 18 year old males don’t have good loss experience relative to the rest of the population. The same is true, by the way, for folks who are at the other end of the age spectrum. After roughly age 70, experience starts to get worse than average also.
Q. If my rates are based on a group, then how much control do I have on my own auto premiums?
A. The key is to make sure you are in the best group possible for your circumstances, and then do your best to present yourself as better than average within that group. For example, geography is another way insurers group drivers. This should be a consideration when determining where you choose to live, especially in metropolitan areas. Where you live can be a huge determinant of insurance costs. You obviously have more control, though, over being ‘better than average’. So, for example, having a better than average driving record will lower your premiums.
Q. What are some other areas we can control that will lower insurance premiums?
A. Many companies today use predictive modeling or ‘credit scoring’ to help determine price. The idea is that someone who is responsible with their credit will also be responsible as a driver. So, this is just another reason to protect your credit rating. The make and model of your car has a big impact on your collision and comprehensive (fire & theft) coverages. Of course, if you don’t owe any money on your car, you should seriously consider dropping these coverages, or at the very least, raising your deductible significantly.
On the liability side, which is coverage in case you are at fault and someone sues you, you can lower the amount of coverage to reduce your premiums. Just make sure you have enough coverage to protect yourself should you cause a serious accident. Hospital bills can add up quickly, and the injured party could go after your assets once your insurance limits are exhausted.
Simple things can also add up. Insurers often offer discounts for using anti-theft devices, for having low mileage or for insuring multiple cars. You can likely get a break for insuring your home with the same carrier.
Q. Are there any other recommendations you would have for someone looking to lower their Tucson auto insurance premiums?
A. As I mentioned earlier, most companies have their own unique methods of setting prices. The only way you can really know which company will have the best price for you is to shop around. Someone is 23 might do better with company A, while someone who is 83 might do better with company B. Fortunately with help from insurance agents, and now with internet sites like InsureMe, shopping around is pretty easy.
Q. Okay, well thanks for your time.
A. No problem.
Fastest Way to Cheap Auto Insurance:
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The best way to lower your auto insurance premiums is to know what coverages you need, and which ones you don't.
Once armed with that information, get several quotes from different insurers.
For the fastest way to the lowest auto premiums, we recommend InsureMe. It takes just a few minutes, and you will get the best rate possible.
Take just a few minutes to fill out the quote info here.
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