The Meaning Of Incidence Rate

There are many confusing terms associated with car insurance plans. Many of them can be confusing to first time insurers who may be unfamiliar with contract wording. The term “incidence rate” is a way the insurance company examines the risk level of the vehicle in question. It’s important to understand how incidence rate affects you since it is an integral part of the scrutiny the insurance company will use to determine your rates.

Some vehicles are much more likely to be stolen, be involved in an accident or another type of driving or moving violation. Many consumers come to the conclusion that they are the only ones who get judged while they have their quote prepared, but in actuality their car is going under the same if not more harsh judgment of the insurance agents and insurance companies.

How are these incidence rates determined? Whenever a vehicle is involved in a theft, accident, or traffic violation, the law enforcement agencies specify the make and model of the vehicle. These statistics are compiled into a database which shows which vehicle types are more likely to be involved in these incidents. The insurance industry uses these statistics to determine the risk level of each vehicle type and adjusts premium rates accordingly.

It seems common-sense that sports cars are more likely to be involved in reckless driving incidents or speeding violations. But there are also some incidents that are not so obvious. For instance, statistics show that a white or light-colored vehicle is more likely to be involved in accidents than darker vehicles. Knowing this information can help consumers make better decisions about the types of vehicles that they choose. Incidence rates can be found either by searching the Internet, or by asking a car dealership for the information. By knowing this information and how it affects your insurance premiums, you will be able to see why your quotes differ from other drivers with similar driving records.

But what if you really had your heart set on a certain vehicle type, only to find out that the specific model was more prone to auto thefts than others? Obviously, your insurance rates will be higher than if you had chosen a different vehicle. If a vehicle is stolen, your insurance company must reimburse you for the full fair-market value of the vehicle. But by installing anti-theft devices, alarm systems, and even GPS systems, you can lower the theft risk and help lower your insurance premiums.

Vehicle color has a much lesser affect on determining premiums. While a white car may be more difficult for other motorists to see, and thereby more likely to be involved in an accidents, it will generally be the other driver who is at fault, and his insurance company, not yours, must reimburse you for any damages. It may be wise to purchase an Uninsured Motorist or an Underinsured Motorist policy in case the other driver either does not have insurance, or his insurance will not fully reimburse you. By having this additional coverage, you can greatly reduce, if not eliminate, the additional premiums that you would otherwise have to pay.

It’s very important that you know what the incident rate for your car is for all of the situations mentioned above. These would be accidents, theft, and the sad but possible possibility that your car could be completely destroyed in a car accident. Everyone might want to ponder their car choices a little bit more, and maybe choose the slightly more conservative car over the flashy white or yellow sports car. This could save you money in the long run, and it might actually help make you safer!