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This question seems to come up each year and around the same time…at renewal! The goal of this article is to assist you in having a better understanding of what goes into determining premiums for personal lines policies, like automobile and property risks. Because there are different factors between automobile and property, let’s break this topic into two sections.
Automobile Insurance
Factors and trends used to form automobile rates are:
- Territory or where the vehicle is most often used;
- Age of drivers in the household;
- Number of vehicles compared to number of drivers in the household;
- If the driver is under 25 years of age, the age and sex are determining factors;
- Claims (the number of ‘claims free’ years differs by each insurance company’s criteria);
- Convictions in the past three years;
- Use of the vehicle (commute to work, pleasure use only, business use);
- Make, model and age of the vehicle(s);
- Coverages you have chosen (Liability, Collision, Comprehensive and Endorsements).
Depending on your insurer’s offerings, there are numerous discounts that can be applied. It is always important to ask your broker to review all the discounts available to you.
Property Insurance
Factors and trends used to determine property rates are:
- Territory or where your home, condo or apartment is located;
- Distance to a fire hall and fire hydrant;
- Building materials of the dwelling (concrete, frame, brick etc.);
- Use of dwelling (strictly personal use or partial business use);
- Unique features within the dwelling (custom finishing versus builder’s grade);
- Claims (the number of ‘claims free’ years differs by each insurance company’s criteria);
- Style of dwelling (two story, split level or high rise versus triplex or townhouse);
- Coverages you have chosen (all risk coverage versus named perils coverage and endorsements).
Again, there are many discounts that can be applied. Ask your broker to review all available discounts to you.
There are other factors as well that are completely determined through each insurance company’s system that your broker can look into for your unique risk.
Don’t be afraid to call your independent broker for clarification.
That’s your broker’s commitment to you… to service you and provide sound and educated advice.
