There are various things that affect insurance rates, premiums and policy guidelines that you may not be aware of when it comes to auto insurance. In this article, we will look at 10 crucial facts about car insurance.
10 important facts in auto insurance
• Type of vehicle determines the car insurance rates
Vehicle type certainly affects the insurance rates due to the fact that different types of car are driven differently. Most insurance firms use the compiled insurance accident data to set their insurance prices. For instance if the vehicle type is costly to repair, has been involved in numerous accidents or involved in many theft cases, that car will certainly have high insurance rates.
• Purchasing a new vehicle certainly increases the insurance premiums
• Registered car owner is deemed as the responsible driver in case of an accident
Regardless of the driver at the time of accident, the person who is registered is considered as the responsible person and should file a claim with the car insurance company. One should therefore ensure that they transfer ownership after selling the vehicle.
• Monthly payment increases the insurance premiums
Paying the insurance premiums in installments is more costly than paying it at once.
• Selecting lower deductibles increases the premium
Insurance prices are influenced by the amount of money that the insurance firm anticipates it may have to pay in case of an accident. Therefore, if the insured agrees to contribute large proportion of the average damage cost by selecting higher deductibles, the insurer certainly knows the amount to cover will be low and they will therefore lower the premiums and vice versa.
• Coverage determines the premium amount
If you have many coverage types with higher limits, the price of insurance will be high since the insurance company is taking a lot of risks.
• Different auto insurance companies have different insurance rates
Different auto insurance firms use different methods and procedures to assess the risk and determine the insurance rates. It is very rare to come across insurance firms with similar prices for the same insurance policy. It is therefore important that you compare the insurance rates for different companies to enable you select the firm with the most reasonable prices.
• Credit rating impacts the insurance rates
Studies have shown that an individual credit scores can be used to anticipate their probability of filing an insurance claim. Probability of people with lower credit score filing a claim was found to be very high. Therefore, insurance firms will most likely increase the insurance rates for individuals with lower credit scores and vice versa.
• Auto insurance firms can non renew or terminate your coverage at any time
The insurer can cancel the policy for any violation of any of their guidelines during the time of the period.
• Auto insurance comparison sites lead to a decrease in the premium rates
Comparing the insurance quotes of various insurance firms increased competition in the insurance industry. This in return resulted in lowering of the premium rates of various firms in an attempt to attract potential customers.