Understanding Insurance Claims

Risk Levels For Auto Insurance And Determining Which One You Are

The primary factor that affects the auto insurance rates you pay is your risk level. When insurance companies provide quotes for you, they determine what risk level you are and place you in a category. Most companies use three categories of risk levels. Here is an explanation of what the risk levels are and how you can determine which one you are.

The Low-Risk Category

If you have a clean driving record and no claims on file with any insurance policy you've had in the past, you might fall into the preferred risk category. This category is for people who are the lowest risk for insurance companies. Insurance companies love these drivers, as they pose very few risks. They are generally cautious drivers that carry insurance coverage all the time. They do not allow lapses in coverage and have clear driving records. People that fall into this category generally have a history of three years of no driving violations.

The Average-Risk Category

People who fall into the second category are careful drivers that pose some risks to insurance companies but not extreme risks. Insurance companies often call this the standard-risk category, and most drivers fall into this classification. People in this category may have some minor marks on their records, such as a speeding ticket or a no-fault accident. Insurance companies charge average rates to people in this group.

The High-Risk Category

The last category is for high-risk drivers. People can land in this category for things that are out of their control or for things in their past. A 16-year old male driver, for example, falls in this classification because of his age and gender. These are factors that are out of this driver's control.

The factors that are within a person's control that cause them to be high-risk drivers are their driving records and history of claims. A person who has a DUI, for example, automatically becomes a high-risk driver for a specific amount of time. People with lots of tickets or claims also fall into this classification for the tickets and claims they incurred.

After reading through the categories and differences in each, you probably know where you fall. If you work on avoiding traffic violations and accidents, you might be able to improve your risk level over time. To learn more about risk levels or to get a quote, call an auto insurance agent of your choice today.

To learn more, contact a resource like Illinois Insurance Center Inc.