Merit Rating
What Does Merit Rating Mean?
A merit rating serves as the foundation for calculating an auto insurance premium. It is determined by a policyholder’s driving record or performance as a vehicle operator. A high merit rating often results in a higher premium.
Insuranceopedia Explains Merit Rating
Insurance covers risk, with higher risks leading to higher premiums for the policyholder, as greater risks mean a potential for greater financial loss for the insurer.
Individuals seeking auto insurance with no history of risk exposure will be charged a more affordable premium. However, if they have committed traffic violations or been involved in accidents, this will lead to a higher merit rating, resulting in a more expensive premium.
The merit rating plan assigns higher points to those involved in serious driving accidents and may offer discounts to accident-free drivers.
