If you want to save on car insurance premiums, it is helpful to compare rates from several insurance companies.
Policy Genius reports that when calculating and establishing auto insurance premiums, companies use several factors and considerations. The purpose of these calculations is to balance the likelihood of you filing a claim with how much you have to pay for coverage. For example, a middle-aged female who drives an older station wagon will generally pay lower premiums than a teenage male who drives an expensive sports car. The likelihood of the insurance company having to pay a claim on the younger male driver is higher, and the cost to repair his expensive sports car would be more than the cost to repair an older station wagon.
All insurance companies use their own formulas when calculating premiums, and many of these companies update and modify their formulas regularly. According to Nerdwallet, some of the most common factors considered when calculating premiums include:
Although these are some of the most commonly considered factors in calculating premiums, each insurance company weighs the factors differently. One company might place a high value on your driving history, while another might focus more on your age or location. Shopping around and getting multiple quotes will help you find the best rate.
What Can Affect Your Car Insurance Premiums?
One factor that will almost certainly increase your car insurance premiums is being deemed liable in a car accident, especially if that accident caused significant injuries and/or damage. Traffic violations, such as speeding, can also cause your rates to go up.
Compare Car Insurance Rates
Insurance companies evaluate the main factors differently, and most do not release details on their formulas or how they calculate premiums.
How Often Do I Have to Pay My Premium?
How frequently you pay your auto insurance premiums depends on the company, although the most common intervals are annually, bi-annually, and monthly.
Premiums, Deductibles, and Quotes
In addition to your insurance premiums, you are also financially responsible for the deductible, which is the amount you must pay out of your pocket before the insurance company will pay anything. For example, if you are involved in a collision that causes $500 worth of damage to your vehicle and your policy includes a $250 deductible, you would pay $250 before the insurance company pays the other $250.
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