Auto insurance is required if you want to drive on public roads. Most states require drivers to carry at least liability insurance. Liability insurance helps protect other drivers if they were ever to get into an accident with you. Many different factors influence the price that you actually have to pay for your insurance, so it can be helpful to understand all the different factors that come into play with your auto insurance.
#1 Lapsed Coverage Increases Your Costs
If you own a vehicle, it is important to keep up continuous coverage. If you fail to keep up continuous coverage, it can cost you. When your coverage lapses, insurance companies can track this. If you allow your coverage to lapse, it is going to cost you more when you get an insurance policy again. By allowing your coverage to lapse, insurance companies see you as a bigger risk now and will not want to work with you without charging you a premium because they see you as a bigger risk. Keeping continuous coverage will help you to score a lower insurance premium.
#2 The Car You Drive Matters
Insurance companies are driven by data. They collect lots of data on the insurance risk of certain cars. They know what type of vehicles get into accidents more often, which type of vehicles get into fender benders and which type of vehicles get into major accidents. They collect as much information as they can on each vehicle that they insure in order to know the risks of insuring that vehicle.
Some vehicles are more expensive to insure than other vehicles. When you purchase a new vehicle, you should always check with your insurance company before you purchase the vehicle in order to determine what the insurance costs will be.
#3 Prices Vary from One Company to the Next
It is also important to understand that prices can really vary greatly from one insurance company to the next. Each insurance company has their own internal formula concerning how to calculate risk, and this can result in very different prices for the same coverage on the same vehicle. That is why you so often see the recommendation to shop around. Shopping around can really help you and can help you get the best rate. Don't assume that you are going to get the best rate from your current insurance company; look around at different insurance services to see if you can get a better rate from someone else.