Variables that you should consider when quoting your auto insurance
Quoting your car insurance is a simple task if you have quality information . In this article we detail the most important factors that affect your price when you quote your auto insurance.
Remember to review these concepts in detail before quoting your auto insurance to get the best price.
1. Macroeconomic factors when quoting your auto insurance
1.1. The exchange rate
Although not directly, the exchange rate of the peso with respect to the US dollar can affect the price of your auto insurance.
To establish the price of insurance, each insurer must perform statistical calculations on the frequency of claims, the probability of their occurrence 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 (generally , in dollars).
When having a claim, the insurer must be responsible for 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 pieces will increase, the insurer will pay a higher amount and, therefore, the price will increase when you quote your auto insurance.
According to the definition of the newspaper specialized in finance EL FINANCIERO , inflation can be defined as:
“A generalized and sustained increase in the prices of products and services and that is why it is one of the few indicators that affects the entire economy, in various forms. ”
In other words, inflation is the measure we use to measure price increases in Mexico.
Insurers use this measure as a reference to adjust rates at each closing.
The higher the inflation, the higher the price will be when you quote your auto insurance.
2. 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. According to data from the National Institute of Statistics and Geography (INEGI) , women historically have fewer claims than men .
In 2016, men represented a 83% of identified drivers involved in a car accident. Women represent a 17%, so it is logical that there are insurers that grant a preferential cost to women .
3. The accident rate of your car
3.1 «But if I didn't use my insurance, why am I being charged 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 earlier, insurers perform statistical calculations to estimate how many claims will have each vehicle. If other policyholders with the same vehicle reported many claims in recent months, it is likely that the insurer in your renewal will increase the cost when you quote your auto insurance.
In general, the claim that has the highest cost for insurers is theft, since they not only have to pay for a repair, but they must pay the total replacement of the vehicle.
3.2 What is the most stolen car?
In general, the car that is stolen the most is the one that is the most successful in sales. 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 you find out how to open a specific vehicle, You can replicate your knowledge for all the same vehicles. This causes thieves to focus their efforts on cars they can find most frequently.
According to the latest figures from the Mexican Association of Insurance Institutions (AMIS) , in the period of March of 2016 to February 2017, the five most stolen vehicles were, from highest to lowest:
- Nissan Tsuru
- Nissan Pick-Up
- Nissan Versa
- Volkswagen Jetta and Classic
- Nissan Sentra
If you vehicle is among the most stolen, when you quote your auto insurance you can have a higher price.
4. 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 Vehicle accident rate varies considerably from one state to another in the Republic.
If we look at the latest AMIS figures, we see that more than half (54. 5%) of insured vehicle thefts in Mexico occur in only three states. Of the total number of robberies in the country, State of Mexico (29. 7%), Federal District (12. 5%) and Jalisco (12. 3%) are the most affected States.
According to AMIS, the 80% of insured vehicle thefts are concentrated in 10 of the 32 State:
- Mexico state
- Mexico City
- New Lion
Insurers offer cheaper premiums to States where the loss ratio is low compared to the average. In the same way, they normalize the rate in the States with the most 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 on your auto insurance quote.
The insurance company Quálitas published in its annual report of 2011:
“… a new underwriting system that makes it possible to better assess the risk of individual policies by including new criteria for underwriting such as the insured's zip code. ”
Insurers understand that the risk at which they are e exposes a car is different depending on the zip code.
The 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 that insurers use to distinguish these areas is through the postal 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 the price of insurance is the State, the zip code also participates.
5. The use you give to your vehicle
5.1 “What does it matter what I'm going to use my vehicle for if the vehicle is the same? Does use change the price of insurance? ”
While this question may be somewhat correct, the risk involved in insuring a freight vehicle versus a private vehicle.
Factors such as 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 sheltered or parked and the probability that a stopped vehicle will suffer 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 goods from point A to point B. It is in It is in your interest that your vehicles are in constant motion, therefore, the probability that they will suffer 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 carrying.
Insurers know this information and adjust their rates to these factors, so it is It is important to consider these factors when quoting your auto insurance.
6. Your date of birth
Like that differences in gender result in different behavior behind the wheel, for auto insurance, age counts.
According to data from INEGI , in 2016 traffic accidents by age of the driver s and distributed like this:
As seen in the graph, the older the lower the number of vehicular accidents.
From 30 years, the graph has a downward trend, therefore, most insurers consider the 30 years the ideal age to apply rates
In auto insurance, age is not just a number. The younger the age, the higher the surcharge the rate may carry to compensate for the higher risk in young people.
7. The equipment of your car
Vehicle brands often sell additional features or designs in packages. These packages make that of the same vehicle there are different «modalities» or versions for sale.
ABS, navigator, sunroof, a more powerful motor or automation of the closing and opening 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 replacement of 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.