Auto Insurance Premium Explained
This article discusses why one insurance carrier so much more expensive than another and describes several factors that actually determine the premium rate. If you are unsure how your auto insurance premium is calculated this article will help understand the process.
When it comes to signing up for insurance, auto premium rates are of great concern to consumers, as they want to save as much as they can on their policies. Therefore, many will search the various insurance options and look for quotes online to compare. Interestingly enough, the cost can vary greatly from one provider to another, and it is difficult to point a finger on the reason behind this. Several factors actually affect the insurance auto premium, and any one of these may incur different policy requirements through different providers.
One of the factors that may cause a variation is the deductibles chosen for your insurance. Auto premium rates go down when you increase the deductible you are willing to pay because it means less out of pocket cost for the insurance provider should you have an accident or incur damage to your vehicle. Therefore, you experience savings based on taking the calculated risk of having to come up with a larger sum of cash when you do have a wreck. While states mandate maximums for deductibles, some providers require the insured to carry lower deductibles than those mandated by state law, which means that the policies through these companies would cost more.
Another issue to consider is the calculations and formulas used by the provider of your insurance. Auto premiums are arrived at based on several aspects of the client, including age, experience, and driving record. While all affect insurance the same way (lack of experience, young age, and a bad driving record will increase the premium you pay), not all providers use the same formula, which can lead to a different in your insurance auto premium.
Believe it or not, cost of insurance can also vary based on location. Because more drivers are on the road in certain places or because statistics show a larger number of accidents in a specific area, the insurance provider is taking a greater calculated risk in covering someone under such conditions. Therefore, they increase the insurance auto premium based on your region. By the same token, they will also charge higher when you drive more. Take note that, for vehicles not driven on a daily basis, many companies offer discounts for "weekend vehicles", insuring them at a lower rate because they are used less frequently in conditions with lighter traffic.
Next time you compare insurance auto premium rates, be aware of these types of differences and read the fine print so that you can more easily compare apples to apples, with all the categorical information being the same across the board.
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Read the complete article by Millard Hiner " Insurance Auto Premium" and several more car insurance articles at the authority web site for car insurance.