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What Exactly Is a Car Insurance Premium? Your Guide to Auto Insurance Costs

What Exactly Is a Car Insurance Premium? Your Guide to Auto Insurance Costs

Car insurance, a mandatory expense that often perplexes many, involves various terminologies, with “premium” being a key term frequently mentioned. But what exactly is a premium? Imagine it as a membership fee; the premium for your car insurance represents the sum charged by your insurer to provide coverage. Generally, this amount is settled through monthly payments, although options to pay biannually or annually are sometimes available from certain insurers.

What Goes Into My Car Insurance Premium?

Several factors go into determining your car insurance premium. Your individual profile plays a significant role, including your age, where you live, your driving history, and even your credit score in some states.

Additionally, the type of car you drive, its age, safety features, and how much it costs to repair all play a role in the premium of car insurance. Finally, the types and amounts of coverage you choose will also impact your premium. For instance, adding comprehensive and collision coverage will usually increase your premium compared to having only basic liability coverage.

Quote vs. Premium: What’s the Difference?

It’s easy to confuse an insurance quote with a premium in auto insurance. A quote is just an estimate of what your insurance might cost. Once you actually purchase the policy, the premium for car insurance is the set price you’re locked into.

The Role of Deductible

Another term you’ll often hear is “deductible.” This is the amount you’d pay out of pocket before your insurance kicks in to cover a claim. A higher deductible typically means you’ll have a lower monthly premium and vice-versa.

Read more: What Is Grace Period in Car Insurance?

Why Do Car Insurance Premiums Increase?

It’s frustrating when car insurance premiums go up, and there are a few common reasons why this happens:

  • Accidents or Traffic Violations: These can make you a riskier driver in the eyes of insurers.
  • Coverage Changes: Increasing your coverage means your premium likely will, too.
  • Location: Moving to an area with higher rates can boost your premium.

How Can I Get the Best Rates?

Wondering how to get a great rate on car insurance in Brookhaven, GA? Focus Insurance Group can help. Our team understands that car insurance can feel complicated. That’s why we take time to compare rates, answer your questions, and find the coverage that best matches your needs and budget. Focus Insurance Group is dedicated to providing quality insurance products and services at an affordable cost. Contact us, and chat and explore ways to protect your wheels while keeping costs in check.

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