Welcome to the "Road to Standard Auto Insurance Market" guide, designed to help you navigate the complexities of auto insurance pricing.
In this document, we'll explain how individuals are charged based on a combination of eligibility and rating factors. These factors play a crucial role in determining your insurance premium, reflecting the level of risk associated with your coverage.
Auto insurance pricing is influenced by two main categories of factors: eligibility factors and rating factors. Eligibility factors determine if you qualify for a particular type of coverage, while rating factors assess the risk associated with insuring you, directly impacting the cost of your premium.
Now, let's explore the journeys of four personas to better understand how these factors come into play.
You Will be Charged Based on Your Risk
Eligibility factors and rating factors are key components that insurance carriers consider when determining the risk associated with an individual and, consequently, the premium they will be charged.
While it may be tempting to reduce or eliminate coverages to help lower your car insurance premium, it’s important to know that there are other factors that may also affect the price you pay.
You can only be denied insurance based on eligibility factors.
Customer Personas
A persona is a detailed and fictional representation of a customer archetype, created to embody specific characteristics, challenges, and behaviors. These personas serve as examples, aimed to help customers relate to different scenarios and understand how their actions can influence their insurance standing.
Example Personas
#1 Jones Family
2 Adults
2 Kids
1 Kid Drives
2 Kids
1 Kid Drives
#2 Mr. Thompson
70 years old
Single
Lapse in coverage due to non-payment
Single
Lapse in coverage due to non-payment
#3 Mr. & Mrs. Jones
Married
No Young Drivers
One of the insureds has a DUI
No Young Drivers
One of the insureds has a DUI
#4 Dylan
18-21 year old
1st time coverage
1st time coverage
Meet the Jones Family
Persona Details
Two Adults, Two Children, One Young Driver
Current MarketStandard
What characteristics do they have that place them in this market?
- Pay their bills on time
- Have continuous coverage
- Minimal Claims History
What unique challenges may they face?
- Young drivers can result in high premiums
What behaviors would place them in the non-standard market?
- Frequent claims leading to higher perceived risk
- Infractions leading to higher perceived risk
- Inconsistent payment of premiums
- Lapse in auto insurance coverage
What characteristics do they have that place them in this market?
- Struggle with consistent premium payments leading to cancellation of policy causing a lapse in coverage
What unique challenges may they face?
- Limited flexibility in payment options (ex: required to pay a full 6-month premium up front).
- Higher premiums
- If he’s on Medicare, he wouldn’t be eligible for the excess medical discount on his Personal Injury Protection (PIP).
What steps could they take to get into the standard market?
- Maintain continuous coverage for the next 6 months
- Take senior driving courses for additional discounts
Meet Mr. Thompson
Persona Details
70 Years Old, Single, Lapse in coverage due to non-payment
Current MarketNon-Standard
Meet Mr. & Mrs. Jones
Persona Details
Married, No Young Drivers, One of the Insureds has a DUI
Current MarketNon-Standard
What characteristics do they have that place them in this market?
- Driving Under the Influence (DUI) on Driving Record
What unique challenges may they face?
- Limited carrier options
- Higher premiums
What steps could they take to get into the standard market?
- Maintain a clean driving record
- Maintain continuous coverage
What characteristics do they have that place them in this market?
- Minimal driving or insurance history
What unique challenges may they face?
- Higher premiums due to the increased likelihood for accidents, tickets, and claims
- Lack of proven continuous insurance coverage
- Limited Carrier Options.
What steps could they take to get into the standard market?
- Choosing a reputable agent with access to multiple carrier markets.
- Consistent payment history
- Continuous coverage
Meet Dylan
Persona Details
18-21 Years Old, Single, Lapse in coverage due to non-payment
Current MarketNon-Standard