Buying Online Auto Insurance - Factors That Determine the Premium

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Most people don’t realize the risks involved with driving, until they are involved in an accident themselves. There’s a reason why modern vehicles come equipped with so many safety features, such as airbags, reinforced chassis, and seat belts. In case there’s a serious accident, these safety features may save your life.


In many states, having an auto insurance policy is a necessary requirement for drivers. In case you are pulled over, the first thing that the cop will ask for is your registration documents and your insurance papers. Previously, buying an insurance policy was a bit of a hassle. There was a lot of paperwork involved, and in order to make a prudent decision, the buyer would have to approach different companies and request a quote. Thanks to the advancements in the field of information technology, you can now purchase an online auto insurance policy, with minimal hassle.

For those who don’t know, an insurance policy serves as a basic safety net in case you are involved in an accident. If you didn’t have an insurance policy, you would have to pay the costs of medical treatment, the costs of repairs, any damage liabilities relating to personal property, and other relevant costs. A serious dispute could arise if the party at fault refuses to pay, or doesn’t have the money. That’s why you must have insurance coverage before taking your vehicle out on the roads in most states.


Insurance policy



Understanding the Main Terms

Most people are often confused by all of the complex terms that the insurance agent might use. It’s important that you understand the basics before you sign on any insurance policy agreement. The insurance premium is the annual payment that you will have to make to the insurance company for their cover. Since there are so many different insurance products available, the insurance premium is generally calculated based on different factors discussed below.

Another term that you might have heard is the deductible. The deductible is the amount that you would have to pay in case you require the insurance cover. In most cases, the insurance policy won’t provide 100% cover. For instance, most insurance companies provide cover of up to 80% in case of an accident.

However, there are a few online auto insurance policies that also provide cover of up to 100%. In case you purchase an insurance policy with 80% cover, the remaining 20% will be regarded as the deductible. However, as mentioned above, there are many different factors that affect the premium. In some cases, the company may offer a very low premium, while it might be go quite high in other situations. Here are a few factors that determine the premium.



Vehicle Model

An older vehicle is more susceptible to damage and driving related problems. Moreover, the chances of an accident in older vehicles are also higher, because they don’t have as many safety features. As a result, if you have an older vehicle model, you are likely to be charged a higher premium.


Vehicle Model



Driver Experience

Another factor that affects the premium is the experience of the driver. Younger drivers, who have just received their license, are at a greater risk of an accident. However, experienced drivers who have been driving for a decade or so, and are in their prime age (25-45), are likely to be charged a lower premium. When you apply for online auto insurance, the insurance company will ask you to fill out a form and include any relevant documents that might be needed. Basically, the main factor that affects the premium is the amount of risk that the company is undertaking. The information you provide will be used in calculating the total risk undertaken by the insurance company.



Past Driving Record

If you have been in several accidents in the past few years, you will obviously have to pay a higher premium. However, if you haven’t filed a claim with the insurance company for several years, you might be eligible for a no claims discount, which will further reduce the premium cost for the year. You should check out several different online auto insurance policies, and compare quotes, in order to get a better idea of the best policies.