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What Drives Personal Auto Insurance Rates?

Auto Coverage

If you drive a vehicle, you are required by law to have personal auto insurance. But why do we need it?

Consider hitting a car and injuring three passengers. If both your vehicle and the other vehicle are valued at $20,000 and considered total losses, and each passenger has medical claims of $20,000, this quickly adds up to $100,000! That’s an amount most individuals wouldn’t want to have to include in their annual budgets.

The function of insurance is to accept the risk from many people to pay for the losses of the few. Personal auto insurance protects drivers from having to personally pay for all the damages they are responsible for resulting from an auto accident. Even though you paid your insurance company much less in premiums, the insurance company pays these higher amounts on your behalf based on your policy coverage.  

How does an insurance carrier determine how much to collect in premium?

Insurance companies use complex rating models to help evaluate your risk and likelihood for loss. There are a variety of factors specific to your policy that might be used. Most people are aware that your driving record, including any accidents or violations you have, can increase your costs. Other personal factors might include:

• Type of vehicle you drive
• Your age and gender
• Where you live
• How many miles you drive
• Your insurance score (credit score)

There are also external factors that affect insurance costs around the nation.  A recap of some of these reasons include:

• Increases in distracted driving
• Increases in accidents and claims reported
• Claims payments are rising faster than inflation, as costs to fix cars, property and people are on the rise
• A higher number of cars and drivers on the road creates a higher probability for accidents

Many pricing models for personal auto didn’t expect the quick escalation of these factors. When current premiums are too low to generate an adequate rate for the risk, prices go up.

Contact a Scott Personal Insurance Account Executive to find out more about auto rates, including what you can do to save money.

This content originally appeared on The Central Insurance blog at

Top Risk Concerns for Businesses and Individuals

Business leaders and consumers share many common concerns, according to data compiled from the 2016 Travelers Risk Index. The annual survey found that cyber risk is still considered one of the greatest risks facing both Americans and American businesses. And while businesses worry more about the implications of getting hacked, consumers are primarily concerned about personal privacy loss, identity fraud and cyber threats.

Top Business Risk Concerns

Medical cost inflation, increasing employee benefit costs and cyber-related technology risks/data breaches again topped the Travelers Risk Index for business concerns in 2016, although the overall proportion who felt the business environment is becoming more risky declined slightly from 2015 to 2016, from 44 percent to 41 percent. 

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Personal Insurance Consumer Risk Index Concern Over Cyber Risk Increases More than 20 Percentage Points from Previous Year

According to the 2015 Consumer Risk Index from Travelers, financial risk continues to top the list of major concerns for Americans. However, fear over cyber risk has grown considerably, making it one of the top three consumer risks in 2015.

Cyber Risk – There has been a dramatic increase in how many Americans worry about cyber risk, from 36% in 2014 to 57% in 2015. Leading the list of specific cyber risk concerns is the fear of bank accounts being hacked (62%).

Financial Concerns & Risks – Americans list financial security as their top concern for the third straight year. Of the 66% that worry about this issue, almost half worry a great deal.

Personal Privacy or Identity Theft – Six out of ten Americans worry about losing personal information or privacy, with 25% worrying a great deal.

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