Auto Insurance Quote: What Goes Into the Numbers?

Auto Insurance Quote: What Goes Into The Numbers?

By James Watch, 05 Mar 19:33

The insurance industry in general can be maddeningly confusing for consumers, with an entire vocabulary that's unique to the business, complex financial formulas, thousands of companies and agents involved in the business and an endless stream of opinions around how much insurance is enough.

If you're looking for a car insurance quote, you may have to deal with some of these issues, but other parts of the equation are left less to interpretation and instead covered by law.

While you might have no idea how much life insurance you need (or whether you need it at all), car insurance is a legal requirement in most states. No room for interpretation: you cannot drive unless you carry the minimum insurance coverage required by law. If you're caught driving an automobile of any kind without having the required insurance, you face serious consequences ranging from having to pay a large fine (this isn't a parking ticket, driving without insurance is considered a major infraction), to having the vehicle impounded or possibly having your driver's license suspended. If you are considering driving a vehicle in the US, contact a reputable insurance company like Famers Insurance, and ask for an auto insurance quote.

What sort of factors and variables go into car insurance rates? Like life and health insurance, age is a factor when it comes to auto insurance. When it comes to drivers, young people are less experienced and statistically more likely to drive in a risky manner, so they tend to pay more. A new car is a bigger loss if it's destroyed in a wreck, whereas an old car is worth much less, so the new car tends to cost more to insure. Where you live can be a factor, because a busy city like NYC sees more fender benders than a rural town. A car insurance quote takes all these variables into account as part of calculating your premium.

What else should I know? Legal minimums help to keep the basics relatively straightforward (especially when compared to life or health insurance), but it's important to realize that the minimum legal car insurance coverage might not be enough. If damages resulting from an accident you're involved in exceed the coverage of your policy, you could be on the hook for paying the additional costs yourself. For this reason, it never hurts to get a car insurance quote for a little more coverage, just in case. The additional premium amount should be minor and many people find it's worth the peace of mind.

Car Insurance might be something that virtually everyone needs, but do you understand all of the terms and definitions used by the industry? Check out our primer to learn everything you need to know before you ask for an auto insurance quote. Once you feel you're prepared -you understand the terminology and you're confident you know what coverage you'll need- try our online tools for generating a car insurance quote without leaving the comfort of your home.