The Logic Behind Cheap Automobile Insurance Prices

The cost of insurance all depends on how much the insurance company stands to lose in case of the occurrence of any of the risks in the policy coverage. The lower the chance or the cost of the risk, then the lower the cost of insurance. Car insurance is a mandatory part of owning a vehicle and you cannot do without it. However, you can get cheap automobile insurance prices based on the following logic by insurance companies:

The type of vehicle

It is quite obvious that a very expensive vehicle will be costly to repair, considering sometimes you even need to import the spare parts. Therefore, your choice of vehicle is a huge influence on the cost of insurance. Is the vehicle safe? Do you stand a higher risk of injuries while using it? A vehicle fitted with extra security features may be the difference between coming out unscathed or with a broken arm. Insurance companies prefer vehicles that are safe, economical and easy to repair as they pose less of a challenge.

The amount of business

The more the number of policies you buy from the insurer, the more their business flourish and they can offer you discounts for bulk coverage. These discounts act as incentive to get you to bring them more of your business than take it anywhere else. With one insurance company, you can get your auto insurance, homeowners insurance and even business insurance. With their discounts, the total cost of insurance for these different policies is less than when you use multiple carriers.

The mileage factor

Mileage is also an important indicator of the amount of risk to a vehicle. Vehicles covering tens to hundreds of miles on a daily basis wear out faster and therefore have a higher potential of getting into accidents as compared to vehicles that cover less than fifty miles in a day. Personal vehicle drivers benefit most from the mileage discount since they can car pool or use public transport over longer distances.

Driver safety

Driving expertise is crucial to insurance companies. Most auto insurer will do a background check on your driving history to see how many accidents you have been involved in. Drivers with a clean driving record show reliability and therefore do not require as much coverage as those who have been involved in many incidents over the past couple of years.

The deductible

The insurance company does not always cover 100% of the costs of repairs for damaged vehicles, especially if you were responsible for the accident. The amount you are required to top up to pay for these repairs is called the deductible. If it takes a higher deductible, it means that you will pay for a larger amount out of pocket in case of an incident. The insurance company can reduce the cost of the premiums for this reason. Therefore, you end up making smaller payments. It is advisable to choose a deductible amount that you can pay effortlessly at anytime without having to borrow money.

About the author

James Marshall is a commercial fleet owner who has years of experience managing a business. He has a vast understanding of auto insurance and you can read more about cheap automobile insurance prices from his blog.

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