Calculating Personal Auto Premiums

September 18, 2013 at 9:45 AM | Posted in Auto | Leave a comment
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It has been 5 years since a competitive auto rating structure was introduced in Massachusetts. A lot has changed for the better – companies are offering coverages that were not previously available here such as accident forgiveness, disappearing deductibles, and good student discounts.

Along with the new coverages comes new ways of calculating the premium for a personal auto policy. It used to be so simple because the rate was calculated using just driving experience, driving record, type of vehicle, and the town you live in. Now there are over 200 rate variables or risk factors that were never used before such as:

  • Driver to vehicle ratios.
  • The average number of miles put on a vehicle each year.
  • Whether or not the named insured has a property policy.
  • Late or non-payment billing history.
  • Operator status.
  • Multi-vehicles versus single vehicle.

With so many new rating factors being used, it is difficult to predict what will happen to a premium when a change is made to the policy. For example, deleting one vehicle from a policy could result in the remaining single vehicle premium going up, or deleting an operator could result in a premium increase.

Some auto rating factors that are still prohibited in Massachusetts are credit scoring, marital status, level of education, home ownership, and age.

Another thing to keep in mind is that insurance companies’ rates change every year as approved by the Insurance Commissioner. However, even though a company can file a rate change at any time during the year, your policy will not be affected until its renewal.

It has been a challenge bringing Massachusetts up to speed with the rest of the country when it comes to competitive auto rating, and more changes are in store for the future. The good news? Protector Group can help make sure you have the right coverage at a price you can afford.


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