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.
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.
