HOW MUCH? - auto insurance

How insurers calculate the cost of auto insurance.

   
 

Auto insurance vital components.

Having auto insurance is a way of protecting yourself from financial disaster if you are involved in an accident. Auto insurance consists of a few major components:

  • bodily injury covers potential injuries to other people, medical expenses and other costs associated with the injury. This coverage is mandatory in many states. It also protects your financial assets from lawsuits.
  • property damage covers losses due to any damage to someone’s property caused by you.

Other components.

- comprehensive insurance will pay for any damage to your car caused by theft, storm, flood etc. This coverage is necessary if your car loan is not paid off.
- collision covers expenses associated with fixing a car if you are involved in an accident, and it is required by lenders.
- personal injury insurance covers car’s passengers if they are injured, regardless of who was at fault
- underinsured and uninsured coverage is supposed to pay for any bodily injuries and property damage for uninsured motorists with whom you may have an accident, or motorists who do not possess adequate insurance coverage.

There are other minor auto insurance components that can be included in a policy, e.g. cost of towing a damaged automobile and rental car fees while your car is being fixed after an accident.

Main factors that determine the cost.

Insurance companies use statistical data to figure out the likelihood of an auto accident. The major factors are: driver’s age, sex, marital status, profession, place where you live (state and city), the type of vehicle you drive, your driving record and previous accidents, if any. Insurance companies will also look at the driver’s credit score and number of miles traveled when quoting an auto insurance policy.

Auto Accident Insurance
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Auto insurance deductibles.

A deductible is the amount that you have to pay, before the insurance company pays its part. Collision and comprehensive coverage always has a deductible, and it could range from $100 and up. Choosing a high deductible is a way of lowering the cost of the auto insurance premium, however, it is important to choose a deductible which you are actually able to pay if involved in an auto accident.

See also: lower auto insurance, online auto insurance, car loan, gap insurance

Related topics: AAA car insurance

 

 

 

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