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How are insurance rates determined?  Insurance rates are determined by all sorts of various factors depending on what is being insured. In general, insurance companies use actuarial science to put numbers to the risk they are taking on and to determine the premiums they need to collect. Actuaries use probability and statistical mathematics to determine what the rate should be given certain factors over time and over a given number of customers. Factors that come into play when determining insurance rates may include (but are not limited to) age, gender, tobacco use, and medical history for health and life insurance; age, gender, driving history, type of car for auto insurance; cost of house, location, safety feature (for home insurance); and so on. Each of the these factors are put into actuarial formulas where the insurance company tries to make sure they will be able to make a profit over time, but also tries to maintain competitive rates so they can keep customers. Most types of insurance also have a deductable. This is the amount of each claim that is not covered by the policy. The lower the deductable the higher the insurance premium. Another factor to consider in any insurance company is quality of service. How fast they get you payment on claims, how responsive they are to questions, etc. These also can go into how much a potential customer is willing to pay for insurance and if they are willing to stay with a given insurance company over a long period of time. Therefore, these items will have some determination on the premiums of some types of insurance.

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Please Note: THIS IS NOT PROFESSIONAL ADVICE.�If you need specific advice please seek a professional who is licensed or knowledgeable in that area.� Please note that we are not insurance experts or lawyers. We accept no liabilty and claim no validity�for the information on this site.�Information on this site may not be accurate. �Insurance customers should always consult their insurance company and/or agent as well as their lawyer to get a good understanding of coverage and other legal questions/concerns about their insurance policy or any policy they intend to buy.

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