A Cheap Car Insurance Rate Doesn’t Mean You Give Up Quality
A cheap car insurance rate doesn’t mean that you give up quality insurance for the lower price. Car insurance companies set their premium using various factors. The general premium comes from the outflow of cash and the income they receive. Cash outflow might include claims they pay, the expense of the office, commissions, salaries for the executives and others, advertising and general business expense. The income comes from investing the surplus premiums and the amount they receive in new premium dollars.
Of course, that’s not all the picture. Each insurance company has underwriters that look at your individual situation and follow rules on how much premium you pay. If you have a lot of speeding tickets or accidents, the probability of another is a bigger potential so the company has to charge more money for your premium. People with a history of driving under the influence of alcohol often pay exorbitant prices because statistically, they tend to do it again. Young male drivers statistically have more accidents so they pay higher rates. Your company bases your personal rate on a set of statistics. Statistically, poorer drivers pay higher rates. That doesn’t mean you’re personally a bad driver, it just means your statistical group has more accidents.
So, if your company charges you more for insurance than other companies, does it mean you have better coverage? If you do a comparison using the same limits of liability and the same deductibles and the cheaper company remains cheaper, then the answer is not necessarily. You still need to investigate the claims paying ability of the company that offers the cheap car insurance rate. Make certain they have a high financial rating so that when you file a claim, they have the money to pay.
Often you’ll find the online quotes come from companies that offer the same product right in your own neighborhood. The difference is that you’ll get several different quotes at one time rather than painstakingly getting one quote from each local agent. If you want to save money once your receive the quotes, simply increase your deductibles, inquire about any discounts or consider whether it really pays for you to carry full coverage.
Even though your older car may be in great shape, companies look only at the Bluebook value. A year or two the cost of comprehensive and collision coverage may actually be what they’d offer if you total your car. Don’t lower your liability limits to save money. The pennies you save each month won’t cover the thousands of dollars you’d be liable for if you don’t carry enough liability to cover hospital bills and property damage in a bad accident.