The list continues to grow for auto insurance underwriting factors used to develop your auto insurance premium.

With higher claim payouts, rising cost of medical care and more billboard attorneys representing Louisiana drivers, the cost of Louisiana Auto insurance is getting expensive.

Most of the major national well known insurance companies actually lose money writing auto insurance in Louisiana and especially in New Orleans. 

For every dollar the company collects in your premium dollars, the more they payout.

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No business can stay in business long if more money is going out the door than is taken in.

The reason insurance companies can turn a profit is because of “the float”.

The float, or available reserve, is the investment income made on the premium collected before those premium dollars have to be paid out in claims.

The problem today is investment income for insurance companies, usually in bonds, is at an all time low on investment return.

When there is not enough return on an insurance company’s investments, they will turn to operating profit.

And the easiest way to increase operating profit?

Raise your auto insurance rates. 

One factor that can lower the rate an insurance company charges you is improve your credit score.

Auto insurance or Homeowners Insurance, insurance companies are using your credit score to develop your rate.

Poor or low credit score could translate to you paying much more for insurance.

A good credit score compared to your neighbor with a poor credit score could result in your neighbor paying $1,000 or more than you for auto insurance and homeowners insurance.

But it is not just your credit score that can determine the price your pay for insurance.

Other underwriting factors that have become common among preferred insurance companies is employment, education level and zip code.

So what does my employment, zip code and education level have to do with auto insurance?


These are all underwriting rating factors used by auto insurance underwriters and actuaries.



So does a trash collector pay more than a doctor for auto insurance?  

All things equal, the answer should be no because the use of the vehicle to and from work should be the same.  

What if you have an outside sales representative and an accountant?

You would see a surcharge of premium on the sales representative’s auto policy because it is assumed the vehicle is on the road more than the accountant’s vehicle so there is a greater chance of an accident or violation.


Zip Code

It matters where you live because an insurance underwriter can use a sample of all insurance claim payouts in your zip code to determine if you reside in a high risk high claim payout area.

Someone living in Hammond would pay less than someone living in New Orleans.  


  • Personal Injury settlements are lower
  • Less drivers on the road
  • Theft claims less likely
  • Medical expenses cost less 
  • Overall claims frequency much lower


Education Level

This one is not without controversy.

You may ask yourself what does your education level have to do with your driving ability?

Most people will agree that a good driver is a good driver no matter their education background but more and more companies are giving a premium discount for the higher level of education degree.

Some discounts include

  • Some High School
  • High School
  • Some College
  • College Degree
  • Advanced Degree

Most people believe auto insurance companies determine your rate based on your driving record. 

That is only one factor that determines your premium.

Auto Insurance companies are using more rating factors than ever before.

It is important that you understand all the discounts available to you and you take advantage of them to lower your auto insurance premiums as rates continue to rise.

Here are some discounts but not all an insurance company may offer

  • Home ownership
  • Multiple vehicles on one policy
  • Bundling Auto, Home, Flood and Umbrella 
  • Claim free 5 years
  • Low mileage programs such as Safeco RightTrack 
  • Paperless billing
  • Pay in full
  • Annual 12 month policy term

Auto insurance rates are going up and we will probably all be paying more for auto insurance.

Take advantage of the discounts and monitor your credit score and if rates keep going up on your current auto policy, take a look at some other companies that may offer a lower rate.

The days of buy an auto policy and hold it for 15 years are probably behind us.

Some homeowners insurance companies offer to package or bundle your auto, homeowners, flood and umbrella policies or an independent agent can provide you more than one company option for all your insurance so you can have all your insurance business with one agency.

One phone call to ask about billing, policy declarations, renewal premium, claims advocacy and develop a local relationship with a customer care representative dedicated to you.

There is a benefit to being able to speak to the same person each time you call.

If you like call centers and speaking to people that don’t care if you come or go, a local independent insurance agency may not be for you.

But local independent agencies offer more than one insurance company option because not all risks fit into one insurance company’s underwriting guidelines.



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