How vehicle insurance companies utilize your nondriving habits to raise rates – Seattle Times

You expect your automobile insurance rates to increase after you buy a brand-new automobile, trigger a crash or add a young driver to your policy. But some insurance providers boost costs based on seemingly unrelated information– like your magazine memberships or what groceries you purchase.

Even if you have a tidy driving record and have actually remained loyal to your insurer for the past 10 years, you might be paying greater premiums than someone with the same driving history, car and background. Why? Rate optimization.

WHAT IS COST OPTIMIZATION?

Rate optimization is the practice of charging higher rates based on the possibility that an individual will not look around for a lower cost. Insurance providers create algorithms based upon all kinds of individual data, consisting of loyalty to other provider and shopping habits, but not your driving practices. This is a different formula from other common vehicle insurance rate aspects like age, neighborhood, gender and the type of car you drive.

Elements can run the range from your publication memberships, the number of phones you purchase and your web searching history. This suggests a company’s most loyal consumers might be most impacted by this practice.

And while it’s true insurers typically have a commitment discount rate, if you’re overcharged by 30%, a 5% or 10% commitment discount isn’t worth it, discusses Robert Hunter, director of insurance at the Customer Federation of America, a nonprofit group based in Washington, D.C.

With the average cost of vehicle insurance at $1,621 annually in 2019, according to a NerdWallet rate analysis, cost optimization might cost you more than you think.