Factors That Affect Your Auto Insurance Premiums

Auto insurance is a legal agreement between you and an insurer that cover the costs of accidents and damage to another person’s car. It indemnifies you against a variety of risks and perils and must meet certain policy limits. While each state sets its own minimum insurance requirements, most vehicle owners purchase extra coverage to compensate for any potential damages or injuries. Premiums are determined by a number of factors, including the amount of coverage you need and the risks you’re willing to accept.

The type of car you drive also matters when it comes to auto insurance. You may have the luxury of driving a sports car, but this type of vehicle can be expensive to repair and can raise your premiums. Other factors, such as age and gender, will affect your auto insurance premium. For example, if you drive a car that is expensive, you’ll pay higher premiums for comprehensive coverage than you would for a cheap, common car.

Auto insurance policies are divided into two types: personal and commercial use. While personal policies exclude vehicles used for business purposes, commercial auto policies generally offer higher liability limits and provisions for employees’ vehicles. Also, commercial policies may provide for additional coverage, such as coverage for hauling goods or rented cars. These are all important considerations, but it’s vital to make sure you know exactly what you’re looking for. The right auto insurance policy is one that fits your needs and budget.

Besides the minimum coverage requirements, you should also consider buying an optional mechanical breakdown coverage. Although not required in every state, it can help you avoid paying large amounts in the event of a vehicle breakdown. Auto liability coverage is required in 49 states. It pays for repairs or replacements that other drivers cause to your car. It also pays for lawsuits that arise after an accident. This is especially useful if you’re involved in a serious accident.

Besides age, gender also affects your car insurance premiums. In most states, men engage in riskier driving behavior than women and are more likely to be involved in accidents than women. However, in some states, gender is not a rating factor, and so you’ll need to be careful about your own insurance policy. If you’re a female driver, you may want to consider switching carriers. For example, if you live in California or Massachusetts, you’ll likely pay a higher premium than a male driver in the same zip code.

Comprehensive coverage protects you against losses other than collisions. It covers the cost of repairs for your car and other property in the event of an accident caused by a motorist without insurance. Comprehensive coverage also pays for any medical expenses, the driver’s insurance doesn’t cover. While collision coverage may seem like the best deal, this type of coverage is not always worth the cost. Consider the deductible and how much you’d like to keep in your pocket.