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What Factors Are Used to Calculate Auto Insurance Premiums?


“I WAS TALKING TO MY FRIEND AND THEY ARE ONLY PAYING $400 EVERY 6 MONTHS FOR THEIR CAR INSURANCE AND I AM PAYING ALMOST $1,000.” THIS IS A STATEMENT WE HEAR ALMOST DAILY. “WHY?” THIS IS ALMOST ALWAYS THE FOLLOW-UP QUESTION. WE UNDERSTAND THE FRUSTRATION YOU CAN FEEL WHEN YOU HEAR YOUR FRIENDS TALKING ABOUT THEIR CAR INSURANCE IN COMPARISON TO YOURS. WE WANT TO SHOW YOU THAT YOU CAN’T COMPARE YOUR PREMIUMS TO THAT OF YOUR FRIENDS AND FAMILY, UNLESS EVERYTHING ABOUT YOU, AND WE MEAN EVERYTHING IS EXACTLY THE SAME. IF THIS IS A QUESTION YOU HAVE WANTED AN ANSWER TO YOURSELF, KEEP READING. 

1) Insurance Service Office (ISO) Vehicle Symbol

THIS NUMBER IS CALCULATED BASED ON MAKE AND MODEL OF YOUR CAR, ITS SAFETY FEATURES, VALUE AND THE COST TO REPAIR IT, IF IT IS GARAGED OR NOT GARAGED, ETC. TYPICALLY, IT LOOKS SOMETHING LIKE THIS: 17,17. ONE NUMBER REPRESENTS THE LIKELY HOOD OF BODILY INJURY IN THE EVENT OF AN ACCIDENT AND THE SECOND IS THE EXTENT OF PROPERTY DAMAGE THE VEHICLE CAN CAUSE. THE BIGGER THE NUMBER THE MORE EXPENSIVE IT IS TO PUT INSURANCE ON THAT VEHICLE.


2) Your Zip Code

WE MUST FACE THE UNFORTUNATE FACT THAT CRIME RATES ARE DIFFERENT EVERYWHERE. THEFT AND VANDALISM ARE MORE LIKELY TO OCCUR IN DETROIT, MI THEN RUMELY, MI. THIS AFFECTS THE RATE, ESPECIALLY IF YOU HAVE A DESIRABLE VEHICLE, LIKE A RUSTY MINIVAN VS. A FLASHY RED CONVERTIBLE. YOU CAN SEE WHERE THAT IS GOING.


3) Age and Gender

UNFORTUNATELY, STATISTICS SHOW THAT DIFFERENT AGE GROUPS ARE MORE LIKELY TO GET INTO CAR ACCIDENTS OR HAVE CLAIMS THAN OTHERS. SAME BEING SAID FOR WHETHER YOU ARE MALE OR FEMALE.


4) Driving Record and Claims

WHETHER YOU HAVE A CLEAN DRIVING RECORD OR A TICKET OR TWO OR THREE, IT IMPACTS YOUR PREMIUMS. IF YOU HAVE EVER HAD TO FILE A CLAIM AGAINST AN INSURANCE POLICY EVEN IF IT WASN’T YOUR FAULT THERE IS ALWAYS THE POTENTIAL THAT IT COULD AFFECT YOUR PREMIUM.


5) Credit History

GOOD OR BAD CREDIT ALSO HAS AN IMPACT. STATISTICS SHOW THAT PEOPLE WITH LOW CREDIT SCORES ARE MORE LIKELY TO FILE A CLAIM. COMPANIES USE “INSURANCE SCORES” WHICH ARE DIFFERENT FROM YOUR CREDIT SCORE AND WILL NOT MATCH YOUR FICO SCORE NUMBER. COMPANIES ALSO USE TIERS TO REPRESENT YOUR INSURANCE SCORE NUMBER, NOT JUST NUMBERS. THE HIGHER YOUR INSURANCE SCORE, THE HIGHER YOUR DISCOUNTS WILL BE.


6) Vehicle Use

HOW OFTEN AND HOW FAR YOU DRIVE YOUR VEHICLE ALSO AFFECTS THE RATE.

7) Coverages and Deductibles

THE AMOUNT OF LIABILITY YOU CARRY. IF YOU HAVE COMPREHENSIVE AND/OR COLLISION. THE TYPE OF COLLISION YOU CARRY; BROAD FORM, STANDARD/REGULAR COLLISION, OR LIMITED COLLISION. WHAT THE AMOUNT OF YOUR DEDUCTIBLE IS; $250, $500, $1,000. THERE ARE MANY VARIABLES WRAPPED UP IN THE COVERAGE YOU CARRY ON YOUR VEHICLE, AND THESE VARIABLES AFFECT YOUR PREMIUM EITHER WAY.


8) Previous Insurance Coverage

HAVING PREVIOUS INSURANCE COVERAGE IS OFTEN REFERRED TO AS INSURANCE EXPERIENCE. THERE ARE SOME COMPANIES THAT WILL NOT TAKE A RISK WITH NO EXPERIENCE. NOT ONLY DOES THIS INCREASE YOUR PREMIUMS BUT IT ALSO LIMITS WHICH COMPANIES YOU CAN BE WRITTEN WITH.


9) MCCA and ATPA (Auto Theft Prevention Authority) Fees

THIS IS THE MONEY THAT WE AS CAR OWNERS IN MI ARE REQUIRED TO PAY. THIS FEE IS PAID PER VEHICLE, PER TERM AND IT GOES DIRECTLY TO THE MICHIGAN CATASTROPHIC CLAIMS ASSOCIATION. THIS MONEY IS USED TO PAY FOR PIP CLAIMS AFTER THE COMPANY THAT INITIATED THE CLAIM HAS REACHED THE THRESHOLD OF $555,000. THE MCCA WILL CONTINUE TO PAY FOR MEDICAL SERVICES AND WAGE LOSS RELATED TO THE CLAIM FOR THE REST OF THE INJURED PARTY’S LIFE.


10) Discounts

EACH COMPANY OFFERS DIFFERENT DISCOUNTS AT DIFFERENT PERCENTAGE RATES. SOME OF THEM INCLUDE GROUP DISCOUNTS SUCH AS MATURE DRIVER (50+), ETC. OTHER DISCOUNTS INCLUDE A MULTI CAR FOR TWO OR MORE CARS ON THE POLICY OR MORE THAN ONE POLICY WITH THE COMPANY, LIKE HOME AND AUTO POLICY. LONGEVITY, PAYMENT HISTORY, CLAIMS FREE, NO YOUTHFUL DRIVERS, PREMIER CREDIT, GOOD STUDENT AND PAID IN FULL ARE SOME OTHER CREDITS AND DISCOUNTS THAT MAY BE APPLIED AND OFFERED BY COMPANIES.


There are MANY factors that go into calculating your car insurance premiums. Some variables can be controlled to an extent and some cannot. At Alger General we will work with you, and your specific risk experience and coverage needs to find the BEST rate for YOU that our companies can offer.


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Munising Location

208 Elm Avenue

PO Box 673

Munising, Michigan 49862

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Marquette, Michigan 49855

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