Auto Insurance – Understand what you are paying for


Auto insurance is one of the basic necessities for every driver. It is to safeguard you monetarily in any unforeseen circumstances. All states in USA require you have at least a basic car insurance that adheres to certain standards set by states. Every state has different requirements for insurance. Some states do not have specific insurance requirement, but it requires documents demonstrating your financial capabilities to handle accidents. It is strongly recommended that you have auto insurance once you own a car, but sometimes, the premium you have to pay can be overwhelming. Premiums for auto insurance vary greatly based on a number of factors: 

Vehicle mileage:

Premiums are directly proportional to the use of your vehicle. The more you drive and increase the mileage, the more premium you will have to pay. The logic behind the rule is the car is more prone to risks with increased usage. The more it is prone to risk, the less friendly it is, to your insurance company. 

Age, Gender, marital status:

Premium rates are much lower if you are a female driver. Male drivers, who are of 25 years of age and are unmarried, end up paying more premiums for their insurance. These premium increments are based on the traffic records that young drivers are more prone to risk. 

Type of the car:

 If you fancy driving a sports car, you will have to pay the price for it, through your premiums. The costlier the car is, the more premium you pay. If you are driving an old car, or a basic model, you pay much less premium for insurance. Also, insurance companies base their premiums on the history of the car model. They have records of the number of accidents that particular model or brand has had and number of thefts of the model and so on. If your car model is prone to thefts, your premiums are likely to go high. 

Area of residence:

Premiums are also decided based on the statistics of your area of residence. If your area is more prone to car thefts and has recorded a lot of accidents in the past, then your premium rates are likely to increase. If you stay in more crowded areas like shopping districts or city centers, then those areas are considered more susceptible for car thefts and therefore you will end up paying higher premium for your insurance. If you stay in country side or a quiet residential area, you will have to pay much lesser premium rates. Also, if your area or state of residence has a history of natural disasters, you will pay much higher premium rates than other cities. 

 Individual Driving record:

Your individual driving record is an important factor that affects your premium rates. If you have clean driving record, you will pay a low premium. If you are involved in accidents in the past or have committed traffic violations, then your premium rates will be very high. The number of traffic tickets you get is directly related to the high rates of premium you pay. 

Type of Coverage:

Premiums of your insurance vary depending upon your type of insurance. It is different in every company and every type of coverage you opt for. If you choose a basic liability-only coverage, your premium rates are much lower. But if you opt for a comprehensive coverage, then you are required to pay a much higher premium rate.