Auto insurance providers follow a process to determine risks involved in insuring your car. Normally, state mandates specific auto insurance premiums and insurance providers have to accept them.
Auto insurance providers work within this framework of regulations and determine applicable auto insurance charges for your car. They also consider various factors like your driving record, make of your car, and similar more.
In some states, there are no federal rules governing applicable auto insurance premiums. It is according to statistical data available through actuaries. Insurance providers maintain a list of data according to previous accidents, information of applicants, and other general information.
This classification delivers various classes of drivers according to their risk factors. Common risk factors include age, gender, marital status, location of residence, make of car, driving record, number of accidents, and similar more. Auto insurance providers assign specific insurance rates according to these factors. This is auto insurance risk selection.
Different auto insurance providers assume different parameters to judge risks. Accordingly, auto insurance rates applicable are not the same with all providers. Hence, there could be discrepancies in auto insurance premium rates for you and your friend although both have similar risk factors.
Changes in determining factors could bring in changes in auto insurance premiums. Further available discounts and surcharges could make more changes in your auto insurance premium costs.