Do I need to know auto insurance company codes?
Higher auto insurance codes typically correspond to higher rates, based on factors like your driving record, credit history, and your car model.
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UPDATED: Oct 26, 2020
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- Auto insurance company codes appear on the insurance card given to auto policyholders
- These codes identify the type of car or truck a person has insured with the company
- Some insurance companies refer to auto insurance codes as symbols that represent cost rates for insuring different types of cars
State laws and regulations set the guidelines for the types of coverages and rates auto insurance companies can offer within their respective states. These conditions
These conditions create a highly competitive auto insurance market that offers a range of options for people looking for the best insurance rates.
As insurance rates among companies tend to stay within a certain range, people insuring a vehicle or switching auto insurance companies can still improve their chances of getting the best rates.
Understanding the types of codes auto insurance companies use can help policyholders better position themselves to qualify for the best rates available based on their auto insurance needs.
Enter your zip code into our FREE car insurance tool above to find the best rates available to you!
What Are Auto Insurance Codes?
Auto insurance company codes appear on the insurance card given to auto policyholders. These codes identify the type of car or truck a person has insured with the company.
US auto insurance companies use these codes to determine how much a policyholder will pay for collision and comprehensive coverage.
Ins company codes, or insurance company codes, typically range from 1 to 27 with the lower numbered codes assigned to low auto insurance rates and the high numbered codes assigned to higher insurance rates. Ultimately, these auto insurance codes affect how much a policyholder will pay to insure a car.
And while a person’s driving record is the main factor affecting insurance rates, the type of car a person drives can also have a considerable impact on the amount paid for auto insurance coverage.
Some insurance companies refer to auto insurance codes as symbols that represent cost rates for insuring different types of cars. These cost rates are based on different risk factors pertaining to the value of the car.
A car or truck’s value dictates how much it costs to replace each part of the vehicle. These factors affect the cost rates assigned to each auto code.
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A car’s perceived value can affect the likelihood that it will be stolen or vandalized. In other words, a high-end car, such as a sports car or a muscle car is more likely to be stolen than a 10-year-old clunker.
Insuring high-end cars means a company takes on a greater risk of having to pay replacement or repair costs because these vehicles are highly sought after.
A well-built vehicle versus one that’s less solid can also affect the value of the car and its assigned company code. For example, car exteriors made from fiberglass are less durable than metal or steel constructed exteriors.
So, a metal or steel constructed car would be more likely to sustain less damage than a fiberglass car in a collision. This can also apply in cases of extreme weather conditions involving high winds and hail.
Ultimately, repair and replacement costs point to the degree of risk involved with insuring different types of cars. In turn, newer cars often carry higher repair and replacement costs than older cars. So, a car that uses modern computer technology would be assigned a higher insurance code than a car that runs on older mechanical systems.
So, a car that uses modern computer technology would be assigned a higher insurance code than a car that runs on older mechanical systems.
Qualifying for Lower Rates
Considering the factors that affect how auto insurance companies assign codes, policyholders can do a couple of things to lower the code rating assigned on a car policy.
Standard model cars are more likely to fall within the low-risk categories than high-end cars. Replacements costs for standard model cars typically run lower since parts are usually easier to get than high-end, specialty vehicle parts.
Policyholders who already own high-end cars also have options when it comes to lowering the code rate assigned in their insurance policy.
Installing safety features, such as alarms or customized locking systems can help reduce the likelihood of a high-value car being stolen.
Safety feature improvements can also take the form of replacing standard tires with specialty tires designed to maneuver better on the roads.
Once you make improvements, an insurance company may lower the auto code rating based on how said improvements reduce the company’s overall risk to insure the car.
The location where a car resides is another factor that affects auto code ratings, which means policyholders living in affluent neighborhoods most likely have a lower code rating than those who live in less affluent areas.
When factored together with a person’s driving record, the type of car insured can add a whole other set of risk factors that insurance companies must take into account.
Maintaining a clean driving record and reducing a car’s overall risk profile can go a long way towards lowering auto insurance rates.
Enter your zip code into our FREE car insurance comparison tool to find good options available to you!