Auto Insurance best guidelines

 What does say Auto Insurance best guidelines

Auto insurance is an expensive purchase for most Americans and is especially expensive for Rhode Islanders. Yet consumers rarely comparison-shop for auto insurance as they might for other products and services. Auto insurance companies vary substantially both in price and service to policyholders, so it pays to shop around and compare different insurance companies. This guide to buying auto insurance was developed to help you become a more knowledgeable policyholder and to get the combination of price and service best suited to your needs. It provides information on how to shop for coverage and how insurance premiums are determined. You will also find an Auto Insurance Buyer's Worksheet in the guide to help you compare premium prices among insurers. 

Underwriting and Rating Both underwriting and rating determine the price you must pay for auto insurance. What is meant by underwriting and how is it accomplished?
The purpose of the process called "underwriting" is to determine whether the risk presented will be accepted, denied, or limited. In other words, the underwriter decides whether the insurance company will write an auto policy for an applicant based on the facts given on the application form. 

When applying for insurance, you are asked a series of questions for the purpose of assessing the likelihood of your presenting a claim or having a loss. You are asked about your driving record and certain personal characteristics which will influence the rate you will be charged. Some of these characteristics, such as age and gender, are beyond your control. Others can be controlled, but since they relate directly to lifestyle or income, you may find it difficult, such as the place where you live or how you use your automobile(s). Number third set of characteristics is highly controllable — the make and model of the car(s) you drive or the limits and coverages you choose to buy, for example. 

What does this information tell an insurance underwriter?

From prior claim data, insurers know that certain characteristics are indicators of possible loss: married persons tend to have fewer claims than those who are unmarried, people who drive their car to works have more claims than people who drive only for pleasure, to cite a few examples.
When submitting an application, all facts about the risk must be revealed. If at a later date, it is found that pertinent information has been withheld or overlooked, the company has the right to withdraw its acceptance or modify the premium charges. In certain circumstances, it may deny coverage of a claim.
Once the underwriter determines the risk as presented is acceptable, the next step is to determine what rate will be charged. 

How are rates and premium charges determined in Rhode Island?  

No individual has a rate that is his, exclusively. Applicants are grouped with others who have similar risk characteristics and the entire group pays the same premium. For example, if you own one car and use it to drive to and from work, you will be in a different group from someone who owns more than one car or one who drives his car only for pleasure. Those who present the least risks will be charged the lowest premium while those who present the higher risk will be charged more, according to their particular risk characteristics.