Many auto insurance companies utilize a method called risk selection to consider their prospective clients, also the rate at which to charge the prospective clients for their insurance premiums. This method is used to enable the auto insurance companies to decide which client is worth in investing in and who are too risky to leave out.
In some states the government decides the minimum limit of the liability coverage as will as the premium of your auto insurance policy. However, in other cases where the auto insurance companies decide themselves on the prospective client the minimum limit of the liability coverage and the premium for each clients. While mandatory laws with respect to minimum coverage exist in some states where insurance firms decide upon the amounts for different policies, the firms generally wield greater autonomy in setting the coverage for property damage and personal well-being than for setting the obligatory liability cover.
Fixed premium rate is a complex process where it rest upon a number of factors believed to be influence within the context of claims that insurance customers can seek against the policy in the future. These factors are the characteristics, traits and abilities of the driver and the coverage of the auto insurance policy.
In general, the person that is seeking auto insurance is interviewed on the personal data regarding him or her. That person is expected to complete a form regarding associated information and formalities. Auto insurance companies create different categories for people as well as the auto insurance policies suitable for each type, and with the collected information the insurance seeker is classified into one of the broad types and the premium rate pertaining to the particular category is accordingly charged. Other personal specifications such gender, age residential area, marital status and public recode of the person are also use.
There are also many other differentiations within each of those broader categories that take in account the subtleties and the premiums are then selected by the auto insurance firm that suit the narrowest type possible.