Finding Premiums Using Commercial Insurance Auto Rating Software
Posted by: bbTacH | on April 28, 2014
There is a simple way for your commercial auto insurer to calculate the premiums it charges for your auto liability and physical damage coverages. Most insurers follow the commercial auto rating procedures established by the Insurance Services Office (ISO). This is accomplished by using the various ratings modules that are summarized below.
Using Insurance Rating Software According to Territory
Insurers, or rating agencies, often divide states that they operate in into subdivisions called rating territories. Rating territories may differ based on certain characteristics; for example, one territory may be largely metropolitan while the other is rural. They will also distinguish between territories that are located near a coastline as opposed to those that are located more inland.
Levels of risk are reflected in the different territories, which factors into the rates applied. Rates in one territory will often be higher (or lower) than those charged in another. It’s important to note that the rating territory has nothing to do with the coverage territory in the policy.
Fleet vehicles versus non-Fleet Insurance Ratings
Under a commercial auto policy, vehicles are subject to either fleet or non-fleet rates. A fleet normally consists of five or more self-propelled autos. Typically the fleet rates are lower than non-fleet rates. Since a trailer is not self-propelled they are not counted in determining whether your vehicles constitute a fleet. Check with your agent if you are unsure whether your vehicles are rated as a fleet.
Size and class are also determining factors:
There are two basic types of vehicles used for business: private passenger cars and trucks, and tractors and trailers. Vehicles in the latter category are subdivided into size classes based on gross vehicle weight (GVW). The manufacturer determines the GVW. It is the weight of the truck when loaded to its capacity with both people and cargo. Depending on its GVW, a truck might be classed as light, medium, heavy or an extra-heavy vehicle.
Most insurers will determine which category a vehicle (or fleet) fits into and then use the commercial auto rating system to then complete the task of determining the proper rates to charge.