Have you ever wondered why someone pays more or less than you do for auto insurance? Insurance companies base everyone’s rates on many different factors, such as their age, make and model of car they drive, zip codes, driving record, etc. They rely on their experience and data to figure out the likelihood of certain people and groups to be in an accident and how much they would likely pay. Large successful companies can estimate quite accurately, and this is why rates are often the same from one year to the next. Sometimes they either underestimate or overestimate the amount they pay in claims for different reasons, such as changes in the economy which could lead to people driving more or less miles. This ultimately could lead to the rates going up or down. In the past 10 years, rates have generally risen because of several factors, for example, a growing economy, distracted driving due to cell phones and a general increase in repair costs of new cars. With COVID, companies are not sure how rates will evolve. Some have seen claims go down, while others have not. We will know more in the next two years or so.
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