How Are Your Auto and Homeowners Insurance Costs Calculated in Oklahoma?

Understanding Premiums and Rates

Premium:

The amount you pay an insurance company for an insurance policy.

Rate:

The cost of insurance per exposure unit (e.g., $1,000 of home coverage or one year of auto coverage).

Example:
If a gallon of gas costs $3 and you pay $42 to fill up your vehicle's 14-gallon tank, the rate is $3 and the premium is $42.

Insurance companies set prices to match the cost of future claims. They consider your personal risk factors and the overall expenses on all claims. More information

Factors Affecting Premiums and Rates

Below are some of the factors that may affect insurance premiums and rates. Keep in mind that some insurers might not use all these factors.

Home Insurance Factors:
  • Where you live (zip code or county)
  • Your claim history
  • The cost to replace your home (note, this is not it’s market value)
  • Your selected deductible
  • Your home’s age
  • The age of your home’s roof and material
  • Your home’s construction type
  • Your credit score
  • Your driving record
Auto Insurance Factors:
  • Your driving record and claims history
  • Where you live and garage your car
  • Your age, gender and marital status
  • The cost to replace your car
  • The type of car you drive
  • Your selected coverage limits and deductibles
  • The annual mileage you drive
  • Your credit score

Changes in these factors since your last renewal can raise or lower your premium. For instance, if your home or auto value increases, this might be reflected in your premium.

Additional Factors Influencing Insurance Costs

Weather Events:

Includes freezes, windstorms, hailstorms, tornadoes, wildfires, and major thunderstorms. The frequency and size of these events add to claim costs.

Riskier Driving:

Leads to more severe and costly accidents, potentially increasing rates.

Reinsurance Costs:

Insurance companies buy reinsurance to spread their risk. Higher reinsurance rates affect customer charges.

Inflation:

Increases the cost of new and used vehicles, car parts, repairs, building materials, and construction labor. More information

Regulation and Rate Filings in Oklahoma

The Oklahoma Insurance Department (OID) doesn’t set insurance rates or premiums. Insurance companies can change their rates and premium formulas by filing them with OID. These new rates can be used immediately or on a later effective date.

Oklahoma law requires that rates:
  • Be adequate.
  • Be based on sound actuarial principles.
  • Be reasonably related to all costs.
  • Not be unfairly discriminatory.

OID’s staff reviews rate changes to ensure they are supported and comply with state law. More information

Tips for Managing Insurance Costs

Ask about discounts:

Check with your insurance company to ensure you receive all available discounts.

Shop around:

Contact multiple insurance companies to receive several quotes and consult an insurance agent to compare coverage types and amounts.

Additional Resources: