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Foundations of Casualty Actuarial Science

classification plans. Contiguous areas, often delineated
by city or country boundaries, are the most common.
Some insurers use zip codes, combining adjacent areas,
or using other criteria like population density.

Territories are the same for all age-gender-marital status
classes and all use classes. Territories are sometimes
vary by coverage. For e.g, there may be fewer claims
for uninsured motorist coverage, so there are fewer
separate rating territories.

Some other rating variables are in common use. These
include good student and driver training discounts for
youthful operators, multiple car discounts, accident and
violation surcharges, and sports car surcharges.

In addition to these mentioned variables, several other
variables are used for automobile physical damage
insurance. These generally are related to the value of
the automobile, its crashworthiness, and its age. Most
insurers use the make and model of the car to form
different sets of rate groups.

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