Auto insurance, like every form of insurance, is a method of neutralizing risk: the policy buyer is willing to pay a relatively small amount of money, a premium, to be shielded from the possibility of a much greater loss to a valuable object. But how do insurers decide how much money will compensate them for assuming the greater risk? How is the car insurance premium itself even calculated?
It’s a complicated formula involving actuarial models on a state-by-state basis, a driver’s own record, and information about the car you drive, which insurance actuaries can determine from a lengthy alphanumeric serial number known as the Vehicle Identification Number – VIN, for short – that is often found etched inside the driver’s door. Simply put, your Vehicle Identification Number affects your car insurance quotes because it helps insurance actuaries determine the true value of the automobile you’re driving.
An increasing number of states are requiring an insurer to obtain a VIN before divulging a car insurance quote. Having specific information about the model and make also helps your car insurance company know if there are any safety enhancements that will improve the chances of a favorable outcome should your vehicle be involved in an accident. It also helps in determining if there are any equipment recalls that will unfavorably affect the safety performance of your vehicle. The Highway Loss Data Institute, among other organizations, keeps track of insurance pay-outs on different models and makes, and it’s quite possible that some insurers use this information to fine-tune quotes. However, this information is far less important than your own driving record and the area in which you’re driving.
To those who know how to decipher them, VINs summarize information about the country the vehicle was manufactured in, the year it was manufactured, the make, model, and assembly plant where the vehicle was manufactured, as well as information about its assembly (for example: whether it was the first or 100th vehicle on the assembly line); and in some instances, even equipment specifications. The last eight characters of the VIN function as a unique identifier that prevents your vehicle from ever being confused with another vehicle. Many people mistakenly believe the color of their vehicle affects the price they pay for automobile insurance. To find affordable car insurance, a good search for car insurance online can definitely help. Affordable car insurance is not far away as long as you’re willing to do some car insurance comparisons for car insurance online. Your VIN may have a strong influence on your insurance rate, but car insurance comparisons can ultimately get you an affordable premium.