This is a brief discussion on a major factor that is used to develop your auto insurance premium: auto symbols.
Your Coverage Is Symbolic
Auto insurance collision and comprehensive coverage rates are based on several factors, such as a vehicle's:
- original cost new
- horsepower, size, weight, other physical characteristics
- year of manufacture (model year)
- vulnerability to damage, and
- sports features (speed, handling, styling, seat capacity)
The above items are represented in a Vehicle Identification Number (VIN). Besides being used as a sort of automobile fingerprint, each VIN is converted into a number between one and twenty-six. At this point, the number is called a "symbol." The higher symbols are assigned to higher end cars such as Mercedes, Ferrari, and similar vehicles which represent the ultimate in luxury, styling, sportiness, etc. Logically, the lower symbols are assigned to modest cars, but even the little Yugo has a symbol higher than one.
Other Characteristics That Affect Symbols
Insurance companies look at vehicle safety features, weight to horsepower ratios, body styling, utility of the vehicle and many other factors beyond the price of the vehicle when assigning a symbol. Generally, vehicles that are known for their safety features (Volvos, Saabs, etc.) receive lower symbols than comparably priced sedans and will cost less to insure. Two door, two-seater, high horsepower vehicles will generally receive a symbol much higher than their actual value because of their sport or high performance nature. Such cars are built to attract drivers who take advantage of the speed and handling ability of their cars.
An insurance company may actually increase or decrease a symbol based upon the claims and damage repair cost history of a vehicle. This can happen a few months or several years after a new model is introduced. Symbol changes may also be made for vehicles that are prone to special dangers such as vehicle rollover or gas tank explosions.
Why You Should Consider Symbols?
First, it will affect your cost to insure a new car. Ask your agent about the differences that features make before buying a car. A simple decision such as ordering a 4 door vs. a 2 door could make the difference in hundreds of dollars in additional insurance costs over the years.
Second, insurance companies calculate their premiums based only on factory built cars containing factory installed options. Other dealer-installed options or aftermarket options (installed by custom auto shops) may not be covered unless you tell your agent. Sure you'll have to pay additional premiums, but that's better than the alternative of not having a feature repaired or replaced after a loss. Cars, trucks and vans are big investments that need to be properly insured. Talk your needs over with an insurance professional to make certain that you're protected.