What is an automotive insurance premium and how is it calculated?

Automobile insurance offers crucial protections for motorists in the event of an accident or if their cars are stolen. Automobile insurance is not only a good idea – it is mandated by law in 48 states and Washington, DC to pay for this protection, you are charged an automotive insurance premium.

The premium you pay for car insurance will vary depending on several factors. Here is what you need to know about how car insurance premiums are calculated to help you find the best offer. We will also explore ways to save on your bonus to keep more money in your pocket.

Learn more: How does automobile insurance work? The bases explained.

A car insurance premium is the amount you pay for an insurer for a police. The premiums are generally paid monthly, semi-one-one-one or annually. Although the monthly payments offer the convenience of paying as you go, the premiums that are paid semesters or annually generally cost the whole. Insurers often give discounts to insured people who pay months in advance, as it decreases the risk of late payments and cancellations.

A car insurance policy will have a franchise, which is different from the premium. A franchise is the amount you have to pay in your pocket before a police cover a complaint.

For example, if your vehicle is involved in an accident, you may have to pay a $ 500 franchise before your police cover the remaining repair costs. Fonts with higher deductibles are generally more affordable because the insurance company will pay less if you submit a complaint. A higher franchise also reduces the number of smaller claims made.

It is easy to compare the prices of stickers when you do automobile shopping. However, what you pay for your car insurance premium is not as simple because different factors can affect the cost – such as your driving file, your location and your credit score. The specific coverage you need – responsibility, protection against bodily injuries, complete or collision – also plays a major role in the cost.

Automobile insurance coverage generally starts with the minimum required by your condition, with additional added coverage for additional protection. For example, if your condition requires coverage of responsibility, you can also add an understanding and a collision to make sure you are protected against damage to your vehicle, vandalism, flight and other responsibilities.

Learn more: The most common types of car insurance explained

Covering liability is generally the most affordable because it only covers bodily injuries or material damage that you cause to others. It does not cover damage to your own vehicle. This type of coverage is required in 48 states. Only New Hampshire and Virginia do not require coverage.

Protective coverage against bodily injuries (PIP) is also known as “faultless” insurance and is required in 12 states. It covers medical costs and others for you and your passengers, it doesn’t matter who is at fault in an accident. It does not cover damage to vehicles, goods or injuries to drivers from other vehicles.

Complete insurance covers certain types of damage, such as vandalism, theft, fire, hail, glass and strikes the animal. However, it does not cover damage caused by a car accident or any other type of collision, medical costs or personal effects.

Collision insurance can be the most expensive because it is paid for damage to your own vehicle after an accident, it doesn’t matter who is at fault. It does not cover non -collist damage, medical expenses or damage to the vehicle of another driver.

One of the main factors affecting your automotive insurance premium is the place where you live due to the variations in laws, regulations, driving conditions and other influences. Each state has its own minimum coverage requirement, and certain obligation of additional protections, such as uninsured motorist coverage or PIP, which increases your premium.

Automobile insurance rates vary considerably depending on the state. For example, North Carolina offers some of the lowest rates, with an average annual estimate of $ 1,148, while Florida ranks among the most expensive, with an average annual estimate of $ 2,923 per year. It is an amazing difference of more than $ 1,700 based solely on the postal code.

Learn more: How does your postal code affect your automotive insurance?

In addition to the coverage you select and where you live, additional factors can influence your automotive insurance premium – like your age, which is important. Zhaneta Gechev, insurance expert and founder of One Stop Life Insurance, explains how bonuses change over time.

“Generally, the younger you are, the more expensive your car insurance. As you get older, your insurance costs will decrease. You will notice a significant drop at 25, still about 50 years old, then once you are over 75, your premiums can start increasing. »»

Additional factors affecting automotive insurance premiums include:

• Deductible. The selection of a font with a lower deductible can increase your premium because your insurer will have to pay more if you submit a complaint.

• Complaints. In the eyes of the insurance company, the filing of a complaint – even a small – increases the risk of submitting future complaints, which can lead to a higher bonus when you renew your police.

• Traffic violations. The more traffic violations, the more risky you are, which leads to higher bonuses.

• Credit rating. A lower credit scoring is a risk indicator, which can increase your premium.

• Creation of vehicles, model and year. More recent vehicles cost more to ensure because they have higher replacement values. Certain brands and models of vehicles are also more expensive to ensure due to the risk of theft and higher repair costs. High performance sports cars can also be more aggressively.

• Optional insurance supplements. Emergency road aid, forgiveness of accidents, reimbursement of rental cars and other additional policy modules provide additional protections beyond the standard coverage for an additional cost.

If it has been a few years since you have been bought automobile insurance for the last time, it is worth comparing the costs. Insurance rates and needs change over time, and you may be able to find a better deal.

Learn more: How to find cheap automobile insurance

Howard Goldberg, vice-president of customer solutions at Plymouth Rock Assurance, underlines the value of shopping and working with an expert.

“When you compare bonuses between companies, make sure you use the same coverage limits and franchises. In this way, you will have a direct comparison between real insurance products and a more precise prices overview. Talking to an independent agent is an excellent starting point because he can guide your decision -making according to his experience and understanding your unique insurance needs. They can also help you by providing you with quotes from several carriers and explaining the differences between each. »»

Many car insurance suppliers also offer discounts for military staff, being a good student, a safe driving file and other factors. You can also be eligible for a discount if you group your automotive police with your home insurance or other types of insurance with the same supplier. It is important to make sure you enjoy all the available discounts.

Learn more: How to get all the best automotive insurance reductions

Examine franchises and complaints

The adjustment of your deductible and avoiding unnecessary complaints are additional means so that you can save. A higher deductible generally decreases your premium because you will cover a higher percentage of repair costs in an accident. Paying for minor repairs yourself can also reduce the number of complaints you make.

What is the difference between an automotive insurance premium and a quote?

A premium is the amount you pay for your car insurance policy, while a quote is an estimate of what you may pay for car insurance with a supplier. Obtaining a quote is a good way to compare costs to make sure you get the best offer, but that doesn’t force you to buy a police.

A policy term is the duration of your coverage in force and is six months or a year. The rate you pay for your car insurance will not change for a police period, unless you make changes for a period. If you are in an accident or if you live a dui, your bonus will not change during the policy term. However, this can increase bonuses when your police renew.

You cannot negotiate your automotive insurance premium. However, you can always save by making sure you take advantage of all the available discounts. If you feel like you are paying too much with your current insurer, you can also go around to see if another insurer offers better prices.

This article was published by Tim Manni.