Save Money When Buying Car Insurance the First Time
It can be confusing and frustrating when you are buying car insurance the first time. You may not understand how they determine the premiums. You may have trouble with where to get insurance. Agents may not want to give you a quote before you own a car.
Here are the answers to your questions. We will talk about premiums first. Car insurance companies base their premiums on 4 factors:
1. Driver who is being insured. Basically, the insurance company is looking to see how likely it is that the driver will file a claim. The insurance industry has collected a lot of data and determined some statistical models that they use to determine their risk. The types of information that they will want to know about the driver are:
2. Type of vehicle being insured. Basically, the more conservative / safer cars have lower premiums because they are more protective of the driver and passengers. This keeps the medical, and other, costs down when an accident occurs.. Also, older cars have less value so they also have lower premiums
3. Where do you live? Every minute that your car is on the road, there is a chance that it could be involved in an accident. TWo things determine how high this chance is for your car: how many miles you drive and the number of other cars that you could encounter. The miles you drive has already been answered as part of the driver information. The congestion number is determined by where your car is driven - where you live. Places with higher traffic have a higher number of accidents and this causes higher premiums.
4. Insurance company. Each insurance company has a book of business. The company needs to charge enough in premiums to cover their costs of claims and their overhead. If the company is running their business well, then they can charge less as premiums and still stay in business. A larger company can also balance the costs of one kind of insurance by the profits from a different kind of insurance. Since the companies are always adjusting their business, it makes sense to shop for new insurance occassionally to find out if your premium is still as cheap as you want it to be.
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