Tier systems, surcharges, bad credit all jack up prices
Once, finding out how much you were likely to pay for auto insurance wasn’t all that difficult.
If you were 34, for instance — a man, good driving record, no kids, lived in Yonkers — you could call up a series of agents, ask for quotes and get something pretty consistent across the board. Rates varied by zip code, vehicle type and other factors, but insurers tended to play by the same rules in gauging risk.
For the past five or 10 years, it’s been a lot more complicated in New York, New Jersey and Connecticut, as it’s been in many states. More and more, insurers are using complicated surcharge and tier systems that do two things: make it far more difficult to assess risk and therefore premium amounts; and skew the system to benefit drivers with flawless records at the expense (literally) of drivers who don’t.
Example: One carrier claims it can offer 15 percent or more off on your auto insurance. And it can, if your driving record is perfect, but here’s the catch: As soon as something happens that increases the risk the carrier assumes in underwriting coverage — if you get a speeding ticket, get into an accident that’s your fault, or include your teenager on your policy as a driver — surcharges kick in that could jack up your monthly premium by as much as 70 percent.
It all depends on a set of factors and complex algorithms that include, of all things, your credit rating, something you wouldn’t expect to influence
what you pay for auto insurance. But nowadays, credit history is likely the No. 1 factor in setting auto insurance rates.
With the changes, insurers have a strong incentive to offer auto insurance at their lowest possible rates up front but make up the difference through surcharges and other mechanisms when circumstances change. And that’s exactly what they’re doing.
You can find some good general auto insurance information from the Insurance Information Institute, including one piece that dispels common myths about auto insurance. III also has a good video designed to educate the consumer and car owner. And, of course, you can consult with the good folks at Gotham Brokerage Co., Inc., a family-owned company that’s served New York clients and those in the Tri-State area for more than 50 years. As an insurance brokerage, we tailor coverage to suit your needs, picking from a variety of underwriters to control costs and enhance coverage.
Call or email us today for a quote!