So back a few years ago, car insurance used to be about ranking and how does each individual rank in a certain specific area? Zip codes, territories, things like that. But lately the last few years you may have noticed that some of the rates have changed, yes, that's a completely different video, but more so the tiering has been different. And what insurance has done and most states have done is they've allowed them to tier people into different rankings.
It's basically a way for an insurance company to say, here's the profile of the person we're looking for. And then here's the rates that fit that profile. When the profile doesn't fit the type of company, you're going to notice that it's not going to be really a good pricing for you. For example, if you go with a really high end company, that's called the preferred tier. If you go with a middle end company, that's called the standard tier. And then if you go with a high risk company, that's called the non-preferred.
Unfortunately, that's the names they gave it. So I'm sorry if you're not preferred to whatever the case is. You know who you are. It was me when I was a teenager. And a lot of you are out there that are that way. But that's the tiering system that they've created that helped them create the model that does the pricing. But why does it help you in the long run? If you're the high risk and you're going to that non-preferred tier, you're actually going to get a better price than if you went with the preferred tier.
So knowing what company is which tier and what type of person you are or what risk you are plays a factor. We're gonna go over the factors that actually make up that tiering system. But before we do that, let's talk about some of the changes that they've started to make. Because in all honesty, a lot of people don't know this was even a thing, let alone that it changed a few years ago. Well, now they're starting to change a little bit more where companies have individual tiering within their tiering. Basically what they call it is a matrix system. So some have a preferred 10.
