How Are Indiana Auto Insurance Rates Set?


Indiana state and flagIndiana car insurance rates are set by coverage providers licensed to sell insurance in the Hoosier State, and their ratemaking formulas are reviewed by state regulators. Premiums are based on the insurer’s bottom line and on a number of details used to determine a driver’s risk level—or likelihood of filing a claim.

People who are considered to have a low risk of filing a claim are generally placed in the standard or preferred market, while higher risk drivers are typically placed in the nonstandard market. These markets correspond to the amount a resident must pay to maintain coverage, with less expensive premiums frequently going to motorists with lower risk levels.

Individual companies target different markets and rate residents in unique ways, which results in policies’ varying significantly in cost. To find a policy that is adequately priced, residents are encouraged to compare Indiana car insurance quotes from as many sources as possible.

Rating Factors

The details that coverage providers use to set a person’s rates include the following:
  • Age
  • Gender
  • Marital status
  • Driving record
  • Type of vehicle use (i.e., business vs. pleasure)
  • Policy limits
  • Location
  • Annual mileage
  • Driving habits
  • Vehicle make, model, and year
Some Factors Are Beyond Drivers’ Control

While an insurer will no doubt look at a driving record to help set premiums, some individuals unfortunately may be classified as high risk drivers despite having a clean record and other favorable factors.

For example, younger and inexperienced motorists in the Hoosier State encounter higher coverage costs because of the risk associated with insuring these residents. The Indiana Criminal Justice Institute (ICJI) stated in a 2010 study that teenagers are at a greater risk of crashing during nighttime hours and are more prone to taking unnecessary risks than older drivers. The ICJI says that in 2011, the chances of a 16- or 17-year-old driver being involved in a crash were about 1 in 10; the chances of a 25- to 34-year-old driver being involved in a collision were about 1 in 17.

Take Advantage of Differences in Insurers’ Rating Formulas

United States flag shaped as IndianaSince different insurers target different markets, high risk drivers may still be able to get relatively affordable coverage for their risk profile. Getting cheap Indiana auto insurance frequently involves taking advantage of the price differences between insurers, as well as the various discounts that companies offer. Similar to the way that companies set rates differently, individual insurers also provide their own assortment of savings that residents can use to lower costs.

Often motorists can get discounts for maintaining clean driving records, driving automobiles with certain safety features, or for insuring multiple cars on the same plan. Drivers are urged to compare quotes and discounts online from as many sources as possible to find an ideal combination that can result in the cheapest policy available with an adequate level of coverage.