Why are some insurance companys rates so much higher then others?

Why are some insurance companys rates so much higher then others?

Isn'-t there a risk "-guide"- insurance company'-s use? shouldn'-t that be the same or similar for all Insurance company'-s?I ask because I switched insurance company'-s and saved $300 for a 6 month policy. That seems to be a bit excessive to be "-off"- by that much.

mbrcatz

Unless you live in a state like NY that sets the rates for health insurance, or in a state like MA, that until recently, set the rates for auto insurance, each insurance company can set their OWN rates. Some companies will "target" youthful operators with clean records, and have slightly lower rates there. Some will target the three car family with no teens, some will target homeowners, etc. There's a HUGE variety of difference in appetite for what a company wants to write - and, it can change from year to year!That's why shopping around, is the ONLY way to find out how good your rate actually is. It's also why most financial advisors (and honest agents) recommend shopping around at least once every three years.FWIW, I saved 50% on my auto insurance by switching carriers in December - $1200. And that's "apples to apples" coverage.

Brian

All companies have to submit their rates for approvals in each of the states they do business. When the insurance companies figure their rates they have to take into consideration all of their expenses and adjust their rates to cover those expenses plus the assumed amount in claims they will have. The states highly regulate how much an insurance company can charge, that being said you have to look at what the insurance companies pay for.Every company pays for different things and different amounts. Towing, Theft of items from the vehicle and so on so forth. Another thing you can look at is different companies are going to rate things differently, such as certain types of cars are going to be treated differently by different companies.Hope that helps.

StephenWeinstein

I think that there is probably a $300 difference just from the differences in how much they spend on paying for insurance agents and television ads. Or, maybe not. Geico and Progressive seem to do the most advertising, but they don't have the highest prices.

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