Variables you should consider when quoting your auto insurance
Quote your auto insurance is a simple task if you have quality information. In this article, we detail the most important factors that affect your price when quoting your auto insurance.
Remember to review these concepts in detail before quoting your auto insurance to obtain the best price.
MACROECONOMIC FACTORS WHEN QUOTING YOUR CAR INSURANCE
1.1. exchange rate
Although not directly, the exchange rate of the peso concerning the US dollar can affect your auto insurance quote.
To establish the price of insurance, each insurer must perform statistical calculations on the frequency of claims, the probability that they will occur, and the costs they expect to pay for claims. This cost includes the exchange rate for parts of a vehicle that are imported and paid for in foreign currency (usually dollars).
When having an accident, the insurer must take care of the repair of the vehicle and, among other concepts, must pay the cost of the parts necessary to repair the vehicle. If the peso depreciates, the price of these parts will increase, the insurer will pay a higher amount and, therefore, increase the price when quoting your auto insurance.
1.2. Inflation
“A generalized and sustained increase in the prices of products and services and for this reason it is one of the few indicators that affect the entire economy, in various ways.”
In other words, inflation is the measure we use to measure price increases in Mexico.
Insurers use this measurement as a reference to adjust rates at each closing.
The higher the inflation, the higher the price when quoting your auto insurance.
YOUR GENDER
It is a fact that men and women behave differently when they are behind the wheel.
2.1 Who drives better, men or women?
We will probably never have a firm conclusion to this question that has been around for decades
In 2016, men made up 83% of identified drivers involved in a car accident. Women represent 17%, so, logically, some insurers grant a preferential cost to women.
Friends, we must drive more carefully.
THE ACCIDENT RATE OF YOUR CAR
3.1 “But if I didn’t use my insurance, why are they charging me more this year?”
If you ever asked yourself this question, it could be because of the accident rate your vehicle had in recent months.
As we mentioned before, insurers perform statistical calculations to estimate how many claims each vehicle will have. If other policyholders with the same vehicle reported many claims in recent months, the insurer will likely increase the cost of your auto insurance when you renew it.
In general, the claim that costs the most for insurers is theft, since they not only have to pay for a repair but also have to pay for the total replacement of the vehicle.
3.2 What is the most stolen car?
In general, the most stolen car is the best-selling car. The more sales a car has, the more vehicles will be in circulation, and therefore, the more vehicles can be stolen.
Also, for a thief, if he finds out how to open a specific vehicle, he can replicate his knowledge for all the same vehicles. This causes thieves to focus their efforts on cars they can find more often.
- Nissan Tsuru
- Nissan pickup
- Nissan versa
- Volkswagen Jetta and Classic
- Nissan Sentra
If your vehicle is among the most stolen when quoting your car insurance you can have a higher price.
THE STATE IN WHICH YOU ARE GOING TO CIRCULATE
Both the State in which you reside and your zip code are key factors when quoting your auto insurance.
4.1 Why is the State so important for the price of insurance?
Because the accident rate of vehicles varies considerably from one state to another of the Republic.
If we look at the latest AMIS figures, we see that more than half (54.5%) of the thefts of insured vehicles in Mexico occur in just three states. Of the total robberies in the country, the State of Mexico (29.7%), the Federal District (12.5%), and Jalisco (12.3%) are the most affected states.
According to AMIS, 80% of insured vehicle thefts are concentrated in 10 of the 32 States:
- Mexico state
- Mexico City
- Jalisco
- Veracruz
- Puebla
- New Lion
- Michoacan
- Sinaloa
- Guanajuato
- Tabasco
Insurers offer cheaper premiums to states where the claims rate is low compared to the average. In the same way, they normalize the rate in the States in which there are more claims. Some insurers even offer additional discounts in States with lower claims, further differentiating rates.
4.2 Why does the zip code affect the price of auto insurance?
It is no secret that the zip code also has an influence when quoting your auto insurance.
The insurance company Quálitas published in its 2011 annual report:
“…a new underwriting system was developed that allows for better risk assessment of individual policies by including new underwriting criteria such as the insured’s zip code.”
Insurers understand that the risk to which a car is exposed is different depending on the zip code.
The reason for this variation in risk may be debatable. But, it is a fact that the accident rate varies considerably from one area to another. The way insurers use to distinguish these areas is through the zip code.
For this reason, the postal code becomes a necessary factor when quoting auto insurance, since it affects the probability of loss, and therefore, the price. Although the factor that most varies is the price of insurance in the State, the zip code also participates.
THE USE YOU GIVE TO YOUR VEHICLE
5.1 “What does it matter what I am going to use my vehicle for if the vehicle is the same? Does use change the price of insurance?
While this question may have some reason, the risk of insuring a freight vehicle against a private one.
Factors such as the frequency of use or the implications of its use modify the risk, even if the vehicle is the same
Let’s think about the following: when you insure your private vehicle, you will use it to get around. When you reach your destination, your vehicle will be guarded or parked and the probability of a stopped vehicle suffering an accident is considerably lower compared to a vehicle with a lot of movement.
On the other hand, many companies and entire industries depend on moving materials or merchandise from point A to point B. It is in their interest that their vehicles are in constant movement, therefore, the probability of suffering an accident is much higher than that of a private vehicle. In addition, the impact of a vehicle is more serious the heavier the load it is transporting.
Insurers know this information and adjust their rates to these factors, so it is important to consider these factors when quoting your auto insurance.
YOUR DATE OF BIRTH
Just as gender differences result in different behavior behind the wheel, for auto insurance, age counts.
As can be seen in the graph, the older you are, the lower the number of vehicle accidents.
From the age of 30, the graph has a downward trend, therefore, most insurers consider 30 years the ideal age to apply reduced rates.
In auto insurance, age isn’t just a number. At a younger age, a higher surcharge can be charged to compensate for the fact that the risk in young people is higher.
THE EQUIPMENT OF YOUR CAR
Vehicle brands often sell additional features or designs in packages. These packages mean that there are different “modalities” or versions for the sale of the same vehicle.
ABS, navigator, sunroof, a more powerful engine, or automatic opening and closing of windows are some of the functions that car brands include in a package and offer to their customers.
Insurers differentiate one package from another and classify it as the “version” of a vehicle. Different versions have different prices, and therefore the more equipped a vehicle is, the higher its price.
The higher the price, the higher the cost of replacing the parts and the higher the cost of the claim for the insurer.
The more equipment a version of a car has, the higher the cost of insurance.