Basic knowledge on car insurance companies

2007-03-08 10:33:40

( Automobiles )



As a consumer, you should want to have a basic understanding of the methods on how car insurance companies look at you and your car when they have to calculate what exactly you have to pay for as coverage.

With car insurance companies, a base rate is published for each kind of coverage, such as property damage liability and bodily injury. If you are a good driver with a good driving record, you might qualify for this base rate but if you are a driver with a poor driving record, you must be charged an increased amount to reflect the poor record. By multiplying the base rate by a racing factor is how you compute for this increased amount.

Rating is important in the car insurance industry for it has an important function. For the financial stability of insurance companies, rates must be sufficient to cover costs. For car insurance companies to remain competitive in the market, rates must then be reasonable and fair in relation to the risk of loss.

When developing rates, auto insurance companies and rating bureaus actually use a broad statistical base of loss and expense experience.

States don’t actually allow insurance companies to share their respective pricing information. Different car companies then may quote the same driver wildly deviating prices. This is because other companies consider certain characteristics – such as your age and your driving record – as more important and as more of a risk compared with some companies which does not place too much emphasis on these factors.

There are a lot of car insurances. A couple of them are Hartford auto insurance which is widely known, Erie auto insurance, and AARP car insurance, which offers a guaranteed renewability at unaffordable prices.

There is also car insurance for teens. You can have your teen added to your policy or he can also have his own policy as soon as he gets his learner’s permit. Some insurers will charge only a minimal amount to add him to your policy. Other insurers, however, will increase your rates in a large amount because other insurance companies consider teens to be high-risk costumers.

Ultimately, what is important is to buy a car insurance that protects your assets and your well-being. It is hard to know if you are buying safe auto insurance and even if you purchase short term car insurance, it still does not give you any certainty. Be sure to find a company that gives you the comfort and the manner of treatment that you prefer. After this, if a claim has already been made, your next focus should be on getting what damages should be fixed.


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