If you get a quote from five different auto insurers, you’ll likely get five different rates. The discrepancy might make you wonder – how do auto insurers even calculate rates? A new report from LexisNexis, the U.S. Auto Insurance Trends Report 2019, sheds some light on this often murky subject.

Insurers typically use a wide range of factors to calculate your rates. This can include your age, your gender, where you live, what kind of car you drive, your driving record, and sometimes even your credit score. You might already know this, but you might not realize how an insurer’s underwriting process can evolve. The new report looks at some of the issues impacting insurers – and by extension, your rates – now.

Your Risky Driving Habits Can Impact Your Rates

Risky driving habits can increase the likelihood of a claim, so insurance underwriters are very interested in determining how safe a driver you are. This can be done by looking at your driving record for violations. Other things like your age can also play a factor.

According to the LexisNexis report, driving violations have decreased slightly in the last two years, although there are some exceptions to this trend. For example, minor speeding violations have decreased somewhat, but major speeding violations have actually increased. Distracted driving infractions have also increased, a trend that’s evident among all generations of drivers.

Your Car Can Impact Your Insurance Rates

The car you drive impacts your rates for a number of reasons, including how safe it is and how expensive it is to repair. This isn’t new. However, the emergence of advanced driver assistance systems (ADAS) is new.

According to LexisNexis, fewer than 10% of cars had at least one ADAS feature in 2009. By 2019, that percentage had grown to 76%. However, insurers didn’t always have consistent data on ADAS features to incorporate this into underwriting decisions. LexisNexis is working to change this with a standard classification of ADAS features available at the VIN level.

To learn more about how safety features impact rates, check out our recent post on the topic, Will You Pay Less for Insurance If You Drive a Safer Car?

Even Your Driving Data Can Impact the Cost of Your Car Insurance

Would you be willing to share your data with your car insurance company in exchange for premium discounts? According to LexisNexis, about 88% of consumers like this idea.

The concept behind telematics is simple. Instead of relying solely on past performance and general information about the driver and car, insurers can include actual, day-to-day driving usage and performance data to determine rates and discounts.

Telematics and usage-based insurance have been gaining popularity in recent years as technology makes it easy for insurers to monitor drivers. Although the model may seem intrusive at first, drivers can benefit from cheaper rates, as well feedback that can actually help keep them and their passengers safe on the road.

According to LexisNexis, one in three vehicles will be telematics-ready by 2023.

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