Insurance company automobile rating programs contain hundreds of classifications that assist insurers in establishing appropriate premiums based on driving exposures.

Auto insurance premiums are also affected by some factors that are not directly controlled by companies. These include the frequency and severity of crashes, auto repair costs, medical and hospital costs, wage levels of hospital employees, doctor fees and the size of court judgments.

The combination of accident frequency and severity influences the portion of your auto insurance premium that covers losses. Crash frequency is simply how many and how often crashes occur. The higher the frequency, the more insurers pay in claims.

Accident severity is reflected in the amounts paid out for an accident claim. Property damage claim costs under auto liability coverage averaged $1,646 in 1989, rising to $2,220 in 1998. Average bodily injury (BI) claim payments under auto liability coverage have stabilized in recent years due in part to the deceleration of medical-related expenses, safer cars and roads, and advancements being made in the insurance claims process. The average BI claim in 1998 was $10,129.

Tied into these factors is an issue that surfaced in 1997. Analysis by a handful of insurers into the correlation of make and model to the cost of liability insurance has gained attention. Make and model are usually not considered into the equation when determining liability premiums. However, with the increased popularity of sport utility vehicles (SUVs) come questions regarding the injury and property damage that can be inflicted in a collision involving one, especially when the weights of colliding vehicles could differ by a ton or more.

Should make and model become factors in determining liability insurance, insurers face other hurdles. Besides recalculating liability premiums, there are costs associated with reprogramming computers and retraining employees. Also some companies may opt, from a marketing standpoint, not to adjust liability premiums. Whether SUVs will cause an overhaul in liability insurance ratemaking is an unknown.

State law requires that auto insurance premiums be adequate to cover anticipated losses, many of which insurers are able to calculate; some however cannot. In the late 1990s, several auto insurers discounted premiums an average of 2% based on decreased policyholder loss experience, among other things.

The unpredictable nature of Ohio court rulings can affect what we pay for insurance and the terms and conditions of the policy. The average cost of auto collision coverage in Ohio rose $29.57 between 1993-1997, while comprehensive coverage premiums rose $3.50, according to a 1999 National Association of Insurance Commissioners study. The same study showed that Ohioans paid $47.06 more for liability insurance. Ohio Supreme Court rulings have expanded coverage on occasion. The Ohio Chamber of Commerce reports that one such case in 1999 will likely result in higher auto liability insurance premiums for businesses. In Scott-Pontzer v. Liberty Mutual Fire Ins. Company, Mr. Pontzer was killed in a crash while driving a car owned by his wife. The other driver was at fault and had a $100,000 per person liability limit. At the time of the crash, Pontzer's employer carried a commercial auto liability insurance policy and an umbrella policy through Liberty Mutual. Although Pontzer was not engaged in company duties at the time of the crash, his wife filed suit against Liberty Mutual seeking underinsured motorist coverage under the business' auto policy and additional benefits under its umbrella policy. The Supreme Court reversed a lower court ruling, declaring Pontzer's employer UIM coverage applied. The Chamber plans to release an insurance cost evaluation of the case this year.

Other cases with similar outcomes are eminent. One such case, Ezawa v. Yasuda Fire & Marine Ins. Co. of Am., resulted in the Court's ruling that a corporate auto policy provided coverage to an employee's minor son injured by a nonemployee while riding in a non-covered vehicle. The minor's injuries were not related to company business.

The most important factor affecting rates from a company standpoint is competition. Ohio has an environment that facilitates competition among its insurers, helping to keep auto insurance premiums well below the national average (click here).