/
    

Home | Finances | Insurance

Another free Insurance article for you!

Auto Insurance Quick guide: How Rates are Calculated

By: Kade Phillips

How Do Car Insurance Companies Calculate the Rates They Charge?

Depending on your jurisdiction, the insurance premium you pay, can be either set by the government or determined by individual insurance companies, based on a framework of regulations that are set by the government.

Figuring out the insurance premium that an individual companies will charge you, is a bit like putting different pieces of a puzzle together, because car insurance companies combine a number of different elements to arrive at your individual premium. The interesting part of it is that they all have a slightly different way of looking at things, and this produces a variation in prices between companies.

The following is a brief explanation of how the different elements may affect your final insurance rate:

What kind of car do you drive?

Car insurance companies have two basic methods of establishing premiums for your automobile. They use the relative claims experience of the makes and models of automobiles to establish your insurance premium. This means that they will check into the repair costs, the rate of injury, and the likelihood that the particular car may be stolen, to establish their risk and then price it accordingly. The current value of your vehicle is another factor, and insurance companies use a variety of methods to establish the current fair market value of your vehicle.

How is your vehicle used?

It stands to reason, the more you use your auto, the higher the odds that you'll of be involved in an automobile accident at some time. So, all other factors being equal, people who don't do much driving tend to pay much lower premiums than than those that have a long commute to work, or do extensive amounts of driving for other reasons. Also of major importance, is who is using the vehicle.
Your automobile insurance premium costs will also likely be higher if you have inexperienced drivers in your family or a number of different drivers using the car.

Where do you live?

Car insurance rates are generally higher in metropolitan areas. Cities with their considerably higher density of traffic and people, mean that there is a higher likelihood of accidents, theft or vandalism claims.

What's your driving record?

Your driving record is based on the number of years you've been licensed to drive, your previous insurance experience, and the number of at-fault accidents (usually up to the last 6 years but sometimes even longer.) If you drive safely and defensively to avoid convictions and at-fault accidents, your premium will be lower than if you've had a conviction or accident. In a nutshell, the better your driving record, the lower your insurance rates.

What optional coverage limits and deductibles do you choose?

When you purchase your automobile insurance, you can select some of the coverage limits and deductibles.

Most states require the purchase of at least a minimum amount of coverage for Third Party Liability. If you choose a higher coverage limit, you can expect to pay a correspondingly higher premium. If you select a lower deductible, you'll also pay a higher premium. Why? Because in both examples, you're asking the insurance company to assume more financial risk if you're involved in an accident or claim. If you select a lower limit of coverage or a higher deductible, you can reduce your premium costs, but you also shift more of the financial burden of liability and repairs onto yourself.

You could decide not to purchase optional coverage, and this is one way to save on your insurance premium costs. For example, if you have an older automobile, you might want to consider not purchasing collision or comprehensive coverage if the automobile is not worth the additional premium cost.

Interestingly, most insurers have a slightly different take on all of this data, and this is what leads to the wide differences between quotes that one sometimes sees for essentially the same insurance.

Whatever your auto insurance requirements are, be sure to get several comparison auto insurance quotes through kanetix before you buy your policy. You'll be glad you did.

--------------------------------------------------------------------------------------------------

The above description/explanation is intended as a guideline only, and is not to be interpreted as a recommendation to buy or sell any insurance products, or to provide legal or financial advice of any kind. Also, Kanetix Ltd. does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed.

Article Source: http://marriagearticles.net

You may be able to reproduce and republish our article content if you ask Kanetix Ltd for permission -click here to ask for permission. You may use our RSS feed with an active link to our site. Click here to get our RSS feed

Please Rate this Article

 

Not yet Rated

Click the XML Icon Above to Receive Insurance Articles Via RSS!


To Plan Your Wedding Like the Pros ... Click Here! 

To Find Great Shower Ideas Click Here!  

For a Fairytale Wedding on a Budget ... Click Here!  

Additional Articles From - Home | Finances | Insurance
WRITER SIGNUP
Sign Up
Learn More
AUTHORS/WRITERS
Member Login
Submit Articles
Submission Guidelines

PUBLISHERS
Top Authors
Most Popular Articles
Ezine Notifications
Article RSS Feeds


Best Man Without a Speech?
Click Here For Help!

The Original Amalaki


Take charge of your health ... Take Zrii!

SITE INFO
Announcements
About Us
Contact Us
Link to Us
Privacy Policy
Terms of Service
Article Partners

Visit one of our Shops
for Great Products

Alternative Healing
Fitness & Exercise
Chronic Conditions
Emotional Wellness
Nutritional Products
Stress Management
Family Wellness

 
Web MarriageArticles




Submission Guidelines | Contact Us | Link to Us| About Us

© 2006 Marriage Articles. All rights protected.
Use of our free service is protected by our Privacy Policy and Terms of Service

Installed & Customized by That Article Guy

Powered by Article Dashboard