Casualty Actuarial and Statistical (C) Task Force
Tuesday, November 04, 2025
1:00 PM CST
Business Call - Agenda to follow
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Auto Insurance
Background
Last Updated: 9/26/2025
Auto insurance helps protect drivers and passengers financially if there’s an accident or other unexpected event involving a vehicle. It’s a legal agreement between the person buying the insurance (the policyholder) and the insurance company. This agreement promises to cover certain risks listed in the policy, as long as they happen during the time the policy is active and within the coverage limits.
Each state has its own rules for auto insurance, but most require drivers to have at least a basic level of coverage. Many people choose to buy more coverage than the minimum required. The amount you pay for insurance (called a premium) depends on how much coverage you choose and how risky the insurance company thinks you are.
Auto insurance is available for both personal and business vehicles. While the types of coverage are similar, there are some key differences. Personal auto insurance usually doesn’t cover vehicles used for work. Business auto insurance often includes higher coverage limits and extra protections, like coverage for rental vehicles, vehicles driven or owned by employees, large trucks, and vehicles used to carry goods or passengers.
Pricing
Auto insurance premiums are based on two main things: underwriting and rating. Underwriting is a process where an insurer evaluates the risk of an applicant. This involves using personal details and past claims data in algorithms to estimate risk. Rating assigns a price to the policy based on the expected cost and likelihood of potential claims.
Auto insurance premiums change depending on the level of risk the insurer expects. Lower premiums can result from the policyholder accepting more risk. For example, optional coverages may be removed or the deductible, the amount paid out-of-pocket before insurance kicks in, may be increased.
The main rating factors for auto insurance are:
- Location
- Age
- Gender
- Marital status
- Driving experience
- Driving record
- Claims history
- Credit history
- Previous insurance coverage
- Vehicle type
- Vehicle use
- Miles driven
- Chosen coverages and deductibles
Recent innovations in transportation have led to new auto insurance options. Many consumers now use ride sharing, car sharing, and usage-based insurance (UBI). These changes are influencing how some insurers calculate risk. For example, UBI connects insurance costs to driving habits, such as miles driven, time of day, and hard stops. Insurers offering UBI products may use telematics devices to monitor driving habits.
Coverages
Most states require drivers to carry a minimum amount of liability coverage, which helps pay for damage or injuries caused in an accident. Liability coverage includes two main parts:
- Bodily injury – covers medical expenses for other people injured in an accident caused by the insured driver.
- Property damage - covers repairs to another person’s vehicle or property when the insured driver is at fault.
Most auto insurance policies also include uninsured/under-insured motorist coverage, which helps cover costs if the insured driver is injured by someone who lacks insurance or has insufficient coverage.
Some states also require coverage for medical payments, to help pay for treatment for injured driver and/or passengers, and/or personal injury protection (PIP), which covers medical bills, lost wages, or funeral expenses.
Additional coverage options may include:
- Collision – pays for damage to the insured vehicle from hitting another car or object.
- Comprehensive coverage covers damage from non-collision events such as fire, theft, or weather.
These coverages often come with a deductible. While collision and comprehensive coverage are not required by state law, lenders may require them for financed or leased vehicles.
Actions
Status: The ²»Á¼Ñо¿Ëù¹Ù·½â€™s  Auto Insurance Database Report shares national and state-level data on average personal auto insurance costs. It includes earned premiums, incurred losses, earned exposures, and number of claims for both voluntary and residual market business. The report is maintained by the Casualty Actuarial and Statistical (C) Task Force and is updated annually.
The Big Data and Artificial Intelligence (H) Working Group looks at how insurers and third parties collect and use data for marketing, rating, underwriting, and claims. It also reviews how this data use affects consumers and whether it follows state insurance laws and regulations.
In 2020, the Property & Casualty Insurance (C) Committee adopted the , which reviews auto insurance affordability state-by-state.
Auto insurance is one of the most common types of insurance. New technology and changes in how people drive are creating new insurance options, like usage-based insurance (UBI).The ²»Á¼Ñо¿Ëù¹Ù·½â€™s Consumer Insight explains how UBI works, how it affects premiums, and what to consider before enrolling. As self-driving cars become more common, it’s also important to understand how they may affect insurance coverage.
°Õ³ó±ð N´¡±õ°ä’s&²Ô²ú²õ±è;Consumer Shopping Tool for Auto Insurance (2023) helps explain how to buy auto insurance. It is maintained by the Transparency and Readability of Consumer Information (C) Working Group. More resources for understanding auto insurance are available under the Consumer tab on the ²»Á¼Ñо¿Ëù¹Ù·½ website.
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