The cost of a unit of insurance, usually per $1,000 worth of coverage. Rates are based on historical loss experience for similar risks and may be regulated by state insurance offices.
The process by which states monitor insurance companies’ rate changes, either through prior approval or open competition models. (See open competition states; prior approval states)
Credit agencies that determine insurers’ financial strength and viability to meet claims obligations. The six major rating agencies are:
A.M. Best Co.
Duff & Phelps, Inc.
Moody’s Investors Services
Standard & Poor’s Corp.
Weiss Ratings, Inc.
Factors these agencies consider when rating insurers include:
management ability, integrity, and experience
A high financial rating is not the same as a high consumer-satisfaction rating.
The insurance business is based on the spread of risk. The more widely risk is spread, the more accurately loss can be estimated. An insurance company can more accurately estimate the probability of loss on 100,000 homes than on 10. Years ago, insurers were required to use standardized forms and rates developed by rating agencies. Today, large insurers use their own statistical loss data to develop rates. But small insurers (or insurers focusing on special lines of business) that don’t have broad loss data to make them actuarially reliable depend on pooled industry data collected by such organizations as the Insurance Services Office (ISO), which provides information to help develop rates such as estimates of future losses and loss adjustment expenses, like legal defense costs.
To draw a red line (literally or figuratively) on a map around areas that are to receive exclusionary treatment. Refusal to issue insurance based solely on where applicants live is illegal in all states. Denial of insurance must be risk-based.
A company’s best estimate of what it will pay for claims.
Facilities, such as assigned risk plans and FAIR Plans, that exist to provide coverage for those who cannot get it in the regular market. Insurers doing business in a given state generally must participate in these pools. For this reason the residual market is also known as the shared market.
An attachment to an insurance policy that alters the policy’s coverage or terms.
The chance of loss, or the person or entity that is insured.
Management of the varied risks to which a business firm or association might be subject. It includes analyzing all exposures to gauge the likelihood of loss and choosing options to better manage or minimize loss. These options typically include reducing and eliminating the risk with safety measures, buying insurance, and self-insurance. (See self-insurance)
The Vehicle Insurance Rating is a 1 - 5 score indicating which vehicle's insurance cost provides the best value.
data provided by
Vehicle Insurance Ratings
The Vehicle Insurance Ratings are compiled by our data partner, Vincentric. The ratings are based on the anticipated insurance costs of a vehicle when compared to similarly priced vehicles within the same category (SUVs, crossovers, sedans, etc.). To determine the ratings, Vincentric uses a series of statistical models to determine the insurance cost patterns relative to the cost of the vehicle. A higher Vehicle Insurance Rating value indicates that a vehicle is less expensive to insure that other vehicles in that category. Conversely, a lower rating suggests that the vehicle may cost more to insure.