• News
  • Guides
  • Reviews
  • Media
  • About
  • News
  • Guides
  • Reviews
  • Media
  • About
Sign up Now (For Free)

Sign up for our newsletter and receive the latest automotive news in your inbox!

Invalid email address
We promise not to spam you. You can unsubscribe at any time.
Thanks for subscribing!
News
Read Now
  • All News
  • Automakers
  • Automobiles
  • Auto Shows
  • Business
  • EVs & Environment
  • Guides
  • Lawsuits/Legal
  • Regulatory
  • Ride-Sharing
  • Safety & Recalls
  • Technology
Recent
  • Ford “Significantly” Raising Production of Mustang Mach-E While Reducing Prices “Across the Board”
  • Week Ahead: Numbers, Numbers and More Numbers
  • The Rearview Mirror: All That the Name Implies
  • Top Tips for Improving EV Range in Cold Weather
  • Mercedes is First Automaker to Offer True Level 3 Hands-Free Driving System in the U.S.
  • Audi Introduces Fourth “Sphere” Concept: Activesphere
  • Jaguar Land Rover Posts First Profitable Quarter in Two Years
  • Musk Confirms Cybertruck Production Tracking for End of 2023
  • Polestar Raises its Game with the 2024 Polestar 2
  • Toyota CEO Akio Toyoda Steps Down, Hands Reins to Lexus Chief Koji Sato
Editor’s Choice
    Reviews
    Read Now
    • All Reviews
      • Feeder
    • Classic Cars
    • Concept Cars
    • Convertibles
    • Coupes
    • Crossovers/CUVs
    • Diesel
    • Hot hatches
    • Hybrids
    • Luxury Vehicles
    • Minivans
    • Muscle Cars
    • Pickups
    • Sedans
    • Sports Cars
    • Super Cars
    • SUVs
    Recent Reviews
    • A Week With: 2023 Ford F-150 Raptor R 4x4 Super Crew
    • A Week With: 2023 Genesis Electrified G80 AWD
    • A Week With: 2023 Land Rover Defender 110 V-8
    • First Drive: 2023 Honda Pilot TrailSport
    • A Week With: 2023 Jaguar F-Type R Coupe
    • A Week With: 2023 GMC Yukon Denali Ultimate
    • A Week With: 2023 Genesis GV60 Performance
    • A Week With: 2023 Chevrolet Suburban Z71
    • A Week With: 2023 Lexus UX 250h F Sport
    • A Week With: 2023 Mercedes-Benz EQB 300 4Matic
    Editor’s Choice
      Guides
      Car Warranty
      • Endurance Warranty Reviews
      • BMW Extended Warranty
      • Extended Warranty For Cars Over 100k Miles
      • Extended Car Warranty Cost
      • Subaru Extended Warranty
      • CarShield Reviews
      • CarShield Cost
      • Aftermarket Car Warranty
      • CARCHEX Warranty Reviews
      • Reputable Extended Car Warranty Companies
      • Used Car Warranty Companies
      • Best Car Warranty
      • Is CarShield A Scam?
      • Mercedes Extended Warranty
      • CarShield Plans
      Insurance
      • How To Identify A Car Insurance Company
      • Geico Mechanical Breakdown Insurance
      • How Far Back Does A Car Insurance Company Look
      • Mechanical Breakdown Insurance For Used Cars
      • State Farm Mechanical Breakdown Insurance
      • Mechanical Breakdown Insurance From Progressive
      • Dollar A Day Insurance
      • Auto Insurance For SSI Recipients
      • Car Insurance Rates After A Suspended License
      • Auto Insurance For Salvage Vehicles
      • Average Cost of Dodge Ram 1500 Car Insurance
      • Car Insurance Florida
      • Full Coverage Auto Insurance
      • GrubHub Insurance
      • Amazon Delivery Auto Insurance
      Shipping
      • Car Shipping Companies
      • uShip Reviews
      • Auto Shipping From California To Hawaii
      • Montway Auto Transport Reviews
      • Cheap Car Shipping
      • Easy Auto Ship Reviews
      • Auto Shipping Miami
      • Auto Shipping To Alaska
      • Car Shipping Cost
      • Auto Shipping Hawaii
      • Auto Shipping Puerto Rico
      • Sherpa Auto Transport Reviews
      • Auto Shipping Atlanta
      • Auto Shipping Boston
      • Auto Shipping. Chicago
      About
      • About Us
      • Contact Us
      • Terms of Use
      • Privacy Policy
      • Affiliate Disclosure
      • Sitemap
      TheDetroitBureau.com

      More than just “another” place to find news, reviews, spy shots, commentary, features, and guides about the auto industry. TheDetroitBureau doesn’t stop with the press releases or confuse a few lines of opinion with insightful, in-depth reporting.

      Contact Us

      Like what you see? Have some ideas for making The Detroit Bureau.com even better? Let us know, we’d love to hear your voice.

        Media
        Listen Now
        • Headlight News: All Episodes
        More from TheDetroitBureau
        • Guides
        • Latest News
        • Auto Reviews
        • Podcasts
        Headlight News

        TheDetroitBureau.com’s Headlight News offers a look at the past week’s top automotive news stories, as well as what’s coming up in the week ahead. Check out the week’s top story and our latest review…along with a dive into the past with this week in automotive history.

        home > guides > Insurance > What is a Car Insurance Tier System?

        What is a Car Insurance Tier System?

        A car insurance tier system is a way for insurance companies to evaluate risk and determine rates.

        TDB Reviews Team
        TDB Reviews Team
        Dec. 22, 2022

        FIND OUT HOW MUCH YOU CAN

        SAVE ON YOUR CAR INSURANCE

        SAVE ON YOUR CAR INSURANCE

        Affiliate Disclosure

        If you’re dealing with car insurance, you may have encountered the term “tier system.” But what is it, and how does it work?

        In a nutshell, the car insurance tier system is one way car insurance companies evaluate risk. Your “risk” is the likelihood that you’ll file a claim, and the higher the risk, the more expensive your premiums will be. Several factors play into your assessed risk, so we’ve created this comprehensive guide with helpful information about the car insurance tier system.

        When searching for the right car insurance policy, it’s also essential to understand the differences between providers. Our experts have carefully examined major insurance providers to determine the best car insurance deals today. Enter your zip code below to receive free car insurance quotes from providers in your area.

        What is a Car Insurance Tier System?

        Car insurance companies use a car insurance tier system to group drivers by risk and determine their car insurance rates. The system is also known as a rating tier or insurance score. Your auto insurance company will consider different factors to assign you a risk score. They’ll then use this number to place you in a specific tier.

        Here are a few details of the scoring system:

        • The range is 200 to 997.
        • The lower your score, the higher risk you are as a driver.
        • A score of 800 or above means you are considered a low-risk driver.
        • The median score in the U.S. is about 770.

        The tier system departs from systems previously used, where all policyholders receive a standard rate. It also eliminates surcharges and replaces them with risk ratings. Insurance providers can be more precise in their rate calculations with the tier system.

        With this system, safe drivers can also get cheaper rates than they would have under the old system. Added to that, one accident will not necessarily raise your policy’s premiums. However, some insurance providers use different tiers, which means this system is not universal in the industry.


        The Different Car Insurance Tiers

        There are three car insurance tiers: Preferred, Standard and Non-Standard. Here is a more detailed look at each:

        Preferred Tier

        The preferred tier is the lowest risk and receives better car insurance rates than most. To qualify for this tier, you must have:

        • A clean driving record (no accidents or traffic violations)
        • An excellent credit score
        • No coverage lapses
        • A low number of claims

        Some insurance companies may also consider age, even barring drivers aged 25 and under from this tier due to a higher probability of unsafe driving behavior.

        Standard Tier

        The standard tier is for drivers with some blemishes on their driving history, or those who have had a lapse in coverage. To qualify, you must still have:

        • An average credit score
        • Insurance coverage over the last six months
        • Just a few minor traffic violations

        Drivers who fall in this tier typically receive good rates.

        Non-Standard Tier

        The non-standard tier is for drivers with:

        • Several accidents or traffic violations
        • Significant lapses in coverage
        • A below-average or very low credit score
        • No previous insurance coverage

        Drivers in this tier typically pay the highest rates because they present the highest risk.


        Factors Car Companies Use to Determine Rates

        Now that you know how the system works, you’re probably wondering what factors determine car insurance rates. Here are some common ones:

        Age

        In general, younger drivers are classified as a higher risk than older drivers, and thus, they end up paying higher rates. The two primary reasons for this are:

        1. Studies from the Center for Disease Control (CDC) indicate a higher chance of younger drivers practicing unsafe driving habits and getting involved in accidents.
        2. Younger drivers often lack the experience and skills to navigate difficult driving conditions safely.

        Because of this, car insurance companies charge higher rates for young drivers to offset the increased risk.

        Driving History

        Insurance companies view a clean driving record as evidence that you’re a safe driver. Safe drivers aren’t likely to get into car accidents and make claims on their policies. Thus, they pose less risk to the insurance company, which is reason enough to be charged lower rates.

        You’re more likely to have higher insurance premiums if you’ve had any of the following in the past several years:

        • Multiple speeding tickets
        • DUIs
        • At-fault accidents
        • A suspended license
        • Other traffic violations

        The Type of Car You Drive

        Insurance companies assess the make and model of a motor vehicle to determine its risk level, which is used to set premiums. Ultimately, the type of car you drive is one factor insurance companies consider when setting insurance rates. It can have substantial ramifications on your premium.

        High-Risk Vehicles

        In general, luxury and sports cars are considered high risk because they are more expensive to repair and replace. They also tend to be involved in more accidents than other vehicles. Because of this, drivers of these types of cars can expect to have high insurance costs.

        Low-Risk Vehicles

        Family cars and sedans are typically seen as low risk and usually have lower insurance premiums.

        Your Credit Score

        According to the Insurance Information Institute (III), people with higher credit scores are less likely to file claims, so insurers see them as less of a risk. Insurance providers typically offer lower rates to customers with good credit.

        Location

        Urban areas are generally more expensive to insure than rural areas for several reasons:

        • There are often more insurance claims for accidents in urban areas
        • The areas often have higher rates of theft and vandalism
        • More populated cities have heavier traffic on the roads

        By studying the crime, claim and traffic rates of specific locations, insurers can offer drivers a more accurate rate that reflects the risks associated with driving in those places.

        Gender

        According to the World Health Organization (WHO), males under the age of 25 are more likely to get into car accidents than females the same age. They are also more likely to get speeding tickets and other traffic violations. As a result, insurers typically charge higher rates for male drivers.


        Ways to Improve Your Rating Tier

        If you’re classified as a high-risk driver, there are things you can do to improve your rating and get into a lower tier. Here are a few tips:

        Maintain a Clean Driving Record

        If you have an immaculate driving record, you’re likely to be in a lower-risk tier and you will have a cheaper insurance bracket. Conversely, if you have speeding tickets or accidents on your record, you’ll probably be paying more for car insurance.

        Keep Your Credit Score High

        Insurers often use a driver’s credit history to help determine their premium, and a high score can result in lower rates. You can take a few simple steps to improve your credit score, including paying bills before they’re due and keeping your debt levels low.

        Keep Insurance Coverage

        Those insured for a longer period are typically seen as less of a risk and often receive more favorable rates. Another way to improve your rating tier is to avoid lapses in coverage. Even if you are not driving your car, it is essential to maintain insurance coverage.

        If you let your policy lapse, you can be seen as a high-risk driver, which leads to higher premiums. By taking steps to maintain continuous coverage, you can improve your insurance rating tier.


        Tips for Landing Cheap Car Insurance

        While there is no single factor that will guarantee cheap car insurance, there are a few tips to help reduce your rates.

        Shop Around and Compare Rates

        One critical thing you can do when shopping for car insurance is to compare rates from different insurers. Keep these tips in mind when comparing rates.

        1. See the differences between coverage levels and deductibles. If one provider has a higher deductible for the same amount of coverage than another provider, then you know which company will save you more money in an accident.
        2. Ask about discounts. Many insurers offer discounts for good driving records and installing safety devices in your car, among others.
        3. Remember that the most affordable policy is not always the best policy. Pay attention to the fine print before buying an auto insurance policy to ensure that it meets your specific needs.

        Boost Your Deductible

        Your deductible is one of the most critical factors in determining your insurance rates. Your deductible is money you must pay out of pocket before your insurance company begins paying for any damages.

        By raising your deductible, you essentially agree to shoulder more of the financial responsibility in the event of an accident. This can be risky, but it can also lead to significant savings on your monthly premiums. Of course, make sure you are liquid enough to cover your deductible in the event of an accident.

        Reconsider Your Current Coverage

        Most people purchase more coverage than they need, which can lead to higher premiums. For example, you may not need comprehensive or collision coverage if you have an older car. Instead, you could opt for liability insurance, which will protect you financially if you’re at fault in an accident.


        Our Recommendations for Auto Insurance

        Car insurance is a critical component of being a driver. However, it can be difficult to find the right policy. To help you find the best coverage for your needs and budget, you can consult a comparison tool and look at multiple car insurance quotes from different insurers.

        To help you choose, here is some valuable information about three dependable providers: GEICO, Progressive and USAA.

        GEICO: Best Overall

        Aside from a rating of 9.1 in our comprehensive insurance provider review, GEICO is also known for providing clients with extra roadside assistance, mechanical breakdown insurance, rideshare coverage and other special benefits on top of numerous discounts.

        Some of the discounts GEICO offers include:

        • Good student
        • Emergency deployment
        • Federal employee
        • Membership and employee

        Progressive: Best for High-Risk Drivers

        Progressive also earned an overall rating of 9.1 out of 10. This company’s high standing is built on the strength of its industry reputation, coverage, cost and customer experience. Progressive known to offer cheaper insurance for drivers who have recent at-fault accidents, speeding tickets and DUIs.

        Progressive also offers clients discounts such as:

        • Sign online
        • Paperless
        • Pay-in-full
        • Automatic payment

        Read more: Progressive insurance review

        State Farm: Best for Student Drivers

        State Farm earned an overall score of 9.1 out of 10 in our review. It gained excellent scores for its wide variety of coverage, its record of excellent customer service and its savings opportunities for young drivers. State Farm’s Steer Clear® usage-based program can help drivers under 25 get a discounted rate on their premiums, for example.

        This company also offers the following discounts and more:

        • Good student
        • Student-away-at-school
        • Anti-theft
        • Passive restraint

        FIND OUT HOW MUCH YOU CAN

        SAVE ON YOUR CAR INSURANCE

        SAVE ON YOUR CAR INSURANCE

        FAQ: Car Insurance Tier System

        What is a tiered car insurance policy?

        A tiered car insurance policy means that one accident will not immediately raise a driver’s individual or household policy. This is because insurers are using more defined metrics to understand the risks associated with each driver.

        What are the benefits of a tiered car insurance policy?

        There are several benefits to having a tiered car insurance policy:

        1. It can keep rates more affordable for drivers with accidents on their record.
        2. It can be helpful for drivers who live in areas with high rates of accidents.
        3. It can give insurers a more accurate way to assess risk.

        How can you improve your tier rating?

        There are numerous items you can tick off to improve your tier rating. You can take and complete a defensive driving program, ensure you have up-to-date car insurance coverage and avoid accidents and traffic violations.

        What are the tiers of car insurance?

        The three tiers of car insurance are:

        • Preferred Tier: Drivers in this tier are considered low risk by insurers because of clean driving records and excellent credit scores.
        • Standard Tier: Drivers in this tier are considered medium risk by insurers because of average credit scores and a few minor traffic violations.
        • Non-Standard Tier: Drivers in this tier are considered high risk because of heavy traffic violations, below-average credit scores or significant lapses in coverage.

        What are the three types of car insurance?

        The three main types of car insurance that make up a full-coverage policy are:

        • Liability: Only covers the property damages and bodily injuries of the other party in an accident you are legally at fault for.
        • Collision: Covers damages to your vehicle in a car accident, regardless of who is at fault.
        • Comprehensive: Covers damages to your vehicle that are caused by environmental factors, such as severe weather, theft and vandalism.

        Our Methodology

        The Detroit Bureau collects data from every major car insurance provider to formulate rankings of the best insurers. Our in-depth rating system takes into account market share, coverage, auto insurance rate estimates generated by Quadrant Information Services, customer satisfaction, and ratings from industry experts. Each insurer is given a weighted score in four categories, as well as an overall score out of 10.0.
        We recommend auto insurance companies based on these rankings, but we also encourage you to perform your own research and compare quotes to find the best coverage.

        Sources:

        https://www.caranddriver.com/car-insurance/a36133190/car-insurance-rating-tiers/

        https://www.carinsurancecomparison.com/car-insurance-tier-system/

        Recently Published
        Instructor with clipboard writing result of exam in car, closeup.

        What Discounts Does Esurance Provide?

        Dec. 22, 2022
        cheap auto insurance after accident

        How to Get Cheap Auto Insurance After an Accident

        Dec. 22, 2022
        postmates auto insurance

        Domino’s Pizza Auto Insurance: What Coverage Do You Need?

        Dec. 22, 2022

        FIND OUT HOW MUCH YOU CAN

        SAVE ON YOUR CAR INSURANCE

        SAVE ON YOUR CAR INSURANCE

        Share this article:
        © The Detroit Bureau 2023
        • Guides
        • Privacy Policy
        • Terms of Use
        • Affiliate Disclosure
        • Contact Us
        • Sitemap
        Follow Us: