Insurance protects us from paying for major automotive damage.
It might seem like a waste of money at first, but in reality auto insurance makes it so you won't lose your money.
For example, if you are in an accident, auto insurance pays for damage or harm you cause to or get from others. Auto insurance also keeps you from losing too much money if your car is stolen.
The premium—what you pay for insurance—is based on risk.
What's a High-Risk Driver?
A high-risk driver is someone who could cost the insurance company more money than a low-risk driver. If they think you will cost them more, they will charge you more.
Here are a few things insurance companies look at to measure risk:
- Driving record. Accidents that are your fault will increase your rates, and even if they’re not your fault, your rates can go up.
- Unbroken coverage. If you had auto insurance and then dropped it, you become a risk.
- Your credit history. It may not seem fair, but your credit history controls other areas of your life, including insurance.
- Age—Young drivers tend to have more accidents than older.
- Gender—Males have a history of more accidents than females.
Don't add to the number of Stolen Cars.
There are a few things you can control:
- Where you live—The rates are higher in the city where there are more cars.
- Grades—Most insurers give a lower rate for students who maintain a "B" (or higher) grade point average.
- Mileage—Most insurers have a set number of miles that qualify for a lower rate, usually 5,000 to 7,500 miles a year.
- Safety features—If your vehicle has anti-theft devices, anti-lock brakes, air bags, and automatic seat belts, you might qualify for a lower rate.
Make, model and year are also factors. Cars that cost more, are expensive to repair, or are favorite targets for thieves have higher premiums.
Ask your insurance agent to tell you what the insurance premiums will be before you buy the vehicle, and decuss the deductible.