State Farm Insurance Updates Annual Vehicle Ratings

State Farm customers nationwide may soon see a slight drop—or a minor hike—in their auto premiums, after the company announced Wednesday it is implementing its annual vehicle insurance ratings for specific makes and models.

The Bloomington, Ill.-based insurer uses data on claims payment for specific makes and models to help calculate various risks associated with insuring particular types of vehicle. It’s a yearly attempt to make those calculations as accurate and up to date as possible, according to a company official.

“Of course, the make and model ratings are a small part of what determines an individual’s premiums,” State Farm spokesman Dick Luedke said in a phone interview.

Other factors include a policyholder’s driving record, location and claims history. And Luedke says any savings or increases will be marginal—far less, for example, than the impact of a conviction for a moving violation.

“It may go down a little, it may go up a little based on what the claims data shows,” he said. “But we’re talking a very small amount.”

State Farm uses its claims data to create separate indices that reflect the risks of collision damage as well as damage and theft, with that information used to help determine premiums for collision and comprehensive coverages.

The insurer also quantifies claims involving injury to occupants of insured vehicles, with some makes and models possibly qualifying for different levels of discount car insurance. And the company analyzes amounts paid out for damage to other vehicles and injuries to their occupants to create an index that is used in setting premiums for liability coverage.

Luedke said any changes to policyholders’ monthly bills will be reflected in their next premium notice, but he added that State Farm customers “won’t actually know whether claims data had anything to do with it.”

The real value of the annual ratings, he said, is as a tool for consumers to use when shopping for a new vehicle.

“You can go to our website and get an idea about the costs associated with a particular make and model,” Luedke said.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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