Why do car insurance quotes vary so much for the same person?

One of the most frequently asked questions by customers is, “Why do car insurance quotes vary so much for the same person?” Representing a broad range of insurers, Answer Financial is one of the largest insurance agencies in the country. In turn, some of our carriers are among the largest in the country, and have unique customer requirements and pricing formulas for their products, resulting in different rates. Let’s delve a bit deeper into what makes up these differences.

Carriers by Driver Type

First of all, carriers can specialize in a specific type of driver, and a number of criteria are used to create a profile for that target market. Factors that are used include: the driver’s current insurance situation (whether or not there is an existing policy); the driving record related to moving violations; and accidents and other insurance claims, such as those for weather-related damage.

Quotes are Impacted by Variables

Secondly, each insurance carrier uses its own statistical correlation analysis to quantify the “risk implications” of other factors, such as geographic location, gender, creditworthiness and marital status. These and many other variables are aggregated from thousands of data points to determine the likelihood (risk) that a claim will be issued and how significant that claim may be. The higher the risk of paying out a claim and the higher the potential payout to a prospective policyholder, the higher the price of the insurance quote and subsequent premium.

There are variable cost factors in play, as well, in determining the price of an individual product. One has to do with a company’s costs in complying with state regulations that control premiums and mandate financial reserves to be set aside for claims purposes. Then there are “discount” factors, such as those dealing with home ownership, level of education and other demographic factors that predict the risk associated with a particular policy. Finally, wide variation in the return on an insurer’s invested funds, impacted by such things as stock-market volatility, may contribute to pricing decisions.

In general, the ability of a carrier to accurately predict the level of risk associated with individual policies is a critical reason why insurance quotes can vary so much. Over time, from a carrier’s extensive experience evolves better, more narrowly defined customer profiles, which enable them to determine the optimum rate for each profile. The job of Answer Financial is to effectively match the experience, expertise and preferences of individual companies with the unique needs of every driver or homeowner who receives an insurance quote. We’re here to help!

Who is Answer Financial?

As one of the nation’s largest and most reputable auto & home insurance agencies, Answer Financial has insured nearly 5 million homes and vehicles. We work with 40+ top-rated carriers to save our customers an average of $565 a year on insurance.*

On our mobile-friendly website, shoppers can quickly compare rates and customize coverages from multiple home insurers. By simply entering your zip code and home address, Answer can search publicly available records like square footage and year built to deliver side-by-side comparison quotes from reputable insurance companies.

Answer Financial can help you compare, buy and often save the smart way on insurance. So before you shop, remember to rely on your insurance experts to find you the right home insurance plan for your needs and budget.