Auto insurance is a really costly affair these days. It all boils down to the demand and supply theory. Though there is sufficient supply in the form of hundreds of auto insurance companies, the demand just keeps on growing as more and more people buy automobiles.
Auto insurance is not just an added advantage; it is the law in all states. This makes it mandatory for people do go through the entire auto insurance shopping fiasco. And hence the rapid increase in rates over the years. And it still keeps on increasing with no sign of slowing down.
Well, there are a number of factors that affect the auto insurance rates. Firstly, it depends on the type of insurance coverage that you have. A comprehensive plan will set you back by a huge amount. But it is worth the money because you do not have to bank on the other party’s insurance to pay you for your damages. It also pays you for events such as banging your car against a tree or a pole which has no insurance coverage.
The third party insurance or limited insurance is a lot cheaper than the comprehensive package. But here you will have to show fault in order to claim insurance. Your company will pay you only if you are at fault. And you are not covered for losses incurred due to fire and theft etc.
The second factor affecting insurance premium rates is the age of the driver. A younger driver who has just started out will be paying more since he does not have a track record yet and is inexperienced. And it is the same for older drivers, since it is assumed that their psycho motor coordination might be slower compared to their younger compatriots.
The third factor is the track record of the driver. If you have a number of offenses against your driving license, you will obviously be charged more as you will be considered a high risk driver. The more number of times you file for reimbursement, the more your premium will be.
And then there are some other less important factors like the type of insurance company. The big national names will charge you more for all the reliability and standards of operating that they provide you. The lesser known local companies might offer you better deals but you can not be so sure about their reliability.