AUTO INSURANCE ARTICLE
Understanding Car Insurance Premiums
By: mindifCar Insurance is mandatory in the United States. We are required to pay the premiums quoted by insurance carriers. The price offered along with the products offered varies greatly from carrier to carrier.
There are many factors that come into play that can change the price of the premiums offered by different insurance carriers.
The car insurance premium is the amount you pay in order to keep your insurance active in case of damage to your vehicle or an accident. Most companies allow you to set up different plans to pay. You can pay in one lump sum, 2 payments, 3 payments or monthly.
Rates are set based on risk. Insurance companies will look at statistics and base the odds of a driver being in an accident. Accidents whether major or minor are extremely expensive for the carrier. The more accidents a driver is involved in the more costly it becomes.
Young drivers under the age of 25 usually have the highest car insurance as they are most at risk to be involved in an accident. They also are newer drivers and have no record to prove themselves.
Keeping a clean driving record with no speeding tickets or accidents will help keep your premiums lower. However, statistically it is inevitable that we will have at least one accident.
Having an accident, may or may not affect your insurance premiums. If the accident was your fault your insurance will most likely increase. This is due to the fact that your carrier is responsible for paying for the accident. Your company will increase your premium based on a number of factors. They will look at how much the accident cost, if you had sufficient coverage. They may also take into account how long you have been with them as well.
It is important to know that most accidents stay on your record anywhere from 3 to 7 years. This varies from State to State along with each insurance carrier. This means this will affect your premiums for this length of time.
Moving violations will also affect your premiums based on the points you acquire. The more severe the violation the greater the points. Each carrier raises their premiums for moving violations based on an internal calculation and most of the time this is not regulated. Some States do have laws against raising premiums solely based on these. Some insurance carriers do offer an incentive to drivers with a clean driving record.
Insurance carriers want a driver with a clean record as this will prove to them they are a lower risk and less likely to be involved in a costly accident. This will result in lower premiums.