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How do insurance companies calculate the cost of insurance?
Is there a way to know how insurance companies come up with their premiums? I have gotten quotes from a few different companies and the rates are all basically the same.
Shannon Martin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“There can be times when all of the quotes from different
car insurance
companies are around the same price. That means that the information your providing them is accurate.Most insurance carriers use the exact same rating factors but weigh them differently. While the factors they use are common knowledge, how they use the information is complex and is sometimes considered proprietary information.
It is like the difference between Coke and Pepsi. The same ingredients combined with mysterious quantities result in a different taste.
Here is a list of the most common insurance rating factors:
- Age
- Gender
- Credit (for most states)
- Driving history
- Insurance history
- Address
- Year/make/model of car
- Amount of cars vs. amount of drivers
- Applicable discounts
Keeping all of this in mind when shopping for a new insurer, aside from price, quality of service is where some companies shine.
The easiest way to select a new insurance company is to get quotes from multiple insurance carriers simultaneously.
Using an insurance comparison app like
Jerry
can help! Jerry shops with over 50 insurance providers and brings the lowest options right to your phone. Once you have narrowed down your selection, do a Google search on customer service and the claims experiences other customers have had with your selected choice. This will lead you to the right decision!”
View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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