How Auto Insurance Rates Are Calculated

Auto insurance is a type of insurance that protects a motorist from financial loss in case an accident occurs. Auto insurance is also known as liability insurance, since its main function is to provide financial cover for vehicles, particularly automobiles, trucks, and other road-going vehicles. Its main purpose is to offer financial protection against personal injury or physical damage resulting from traffic accidents and from liability which may also arise from personal incidents in a car. Get the facts about Abilene auto insurance
There are different types of auto insurance coverages and premiums applicable for different vehicles, making it difficult to determine exactly which policy would be the most suitable one for you. Factors that affect auto insurance rates include age, gender, driving record, type of vehicle, mileage driven daily, type of coverage desired, credit history, age and criminal background of the driver, and more. However, some factors, such as deductibles, are mandatory to be paid annually and cannot be reduced. Car insurance companies usually assess a person’s risk by calculating his or her age, location, driving record, vehicle make, model, and how many similar vehicles owned by the insured are on the road at any given time. All these factors are considered to help calculate the monthly or annual auto insurance premium.
The monthly premium you pay is calculated by adding your deductibles to the total amount of coverage you want the insurance company to shoulder in the event of an accident. In case of no claim for a specified period of time, your premium will remain the same. Your auto policy covers the cost of damages or injuries to others or property, which means if you are at fault in an accident, you will be partially covered. This partial coverage will be reflected in the lower premium amount you have to pay every month. However, you should take note that in some states, the law requires that you have at least $1 million worth of coverage in order to be fully protected by your auto policy.

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