Car Insurance Premium: It is the law of the land: every driver must have car insurance to legally drive on our state and nation’s roads. Because it is insurance, drivers must pay a premium. That is the monthly fee that is sent to the insurance company every month. At times, this rate will increase due to changes in your driving record. This article will describe a few of the reasons why premiums go up:
- You are in an accident.
- This is one of the most obvious reasons. If you are in an accident, the insurance company has to pay to repair any damages that might have been caused. This makes you a “riskier” driver, so to cover the additional risk, your premiums are increased. Some insurance providers offer what is known as accident forgiveness; this is where your provider does not increase your rate because of an accident. This service is not offered by every provider, so it is important that you check with your insurance company to inquire about their policy.
- You get a speeding ticket.
- The same logic applies to this as it did with being in a car accident. When you get a speeding ticket, insurance companies then see covering you as a “riskier” investment, so, by extension, you have to pay more for the same policy. Depending on your provider, your rate my go back down after a number of years without any addition speeding tickets.
- You get a new car.
- Some people are surprised by this, but it actually makes a lot of sense from an insurance standpoint. With a new car, there is more value. More value means that if the vehicle is in an accident, the insurance company will have to pay out more money. It is, therefore, a “riskier” investment. To keep their profits at the level they want them, insurance companies have to charge more for newer model vehicles. As your car ages and its value decreases, insurance premiums tend to go down.
- Where you live.
- This is generally the most shocking to people, but, yes, your zip code can play a role in how much you pay for car insurance. Insurance is a market, so other drivers/car owners affect your rates. Your premium is partially based on other insurance claims in your area. Insurance companies figure that trends in one area are reflective of all drivers in that area. It may seem unfair as an individual, but it is a common practice within the insurance industry.
Car insurance is one of the most mundane aspects of life. It’s boring and no one wants to pay out money every month to a corporation. However, it does protect you in cases of car accidents. Additionally, it’s the law. If you are pulled over and you do not have car insurance, you are going to get quite a hefty ticket from the police.
The Sargent Firm, one of Idaho’s trusted law firms, strongly encourages every driver to exercise caution and to make sure their car insurance is the optimal one for their specific, individual situations. If you find yourself in a car accident, reach out to our office. We will be more than happy to help you recover.
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