Why Is Auto Insurance Needed And Why Does Its Cost Varies?

bulram | May 12, 2013

Auto Insurance

Every individual who has a vehicle has the need for auto insurance for using it legally. This is a kind of financial defense used by vehicle owners, when their vehicle gets involved in any type of accident which causes material or human damage. the rules and regulations pertaining to insurance of vehicles is different for different places, but one thing is common in all the places and that is if you own a vehicle, be it motorcycle, car or truck, you need to buy insurance for driving the vehicle legally on the road.

Is the cost of auto insurance same for everybody?

The cost of auto insurance is not same for everybody. There are many factors taken into consideration by the insurance companies while determining the premium of each person. Some of the important factors include the driver’s gender, age, driving record, marital status, etc, the vehicle’s features and the where and how much the car or the vehicle will be used. It is the coverage on which the monthly fee is dependent. An expensive sports car will always have high premiums.

The basic policy can be extended to natural wear, but it does not apply to the damages caused by natural forces, collisions or by any vandalisms. This is extremely useful, after the warranty is expired.

What causes increase in the premium?

The policy holder or the vehicle owner is always monitored by the insurance company and whenever the vehicle owner breaks the traffic rules like speeding, or meets an accident while driving the vehicle, he or she gets plus points. The more they get plus points, the more they are considered to be risky and so their premium will be higher than others who follow traffic rules and rarely cause any accident.

Tips for avoiding the increase in the cost of auto insurance premiums

The first way by which you can reduce nearly 10% of the cost of auto insurance is by taking and passing an accredited defensive driving course. Secondly, you need to wear seatbelt every time you drive and be very careful while driving. You know, the more you break traffic rules and cause accidents, the more your premium will be. If you get a speeding ticket, you may have to pay 15% higher premium. Again, driving under the influence results into more than 20% increase in the base rate and if you get into accidents then the cost can be nearly 40% more. Even if you meet a very small accident, you need to inform that to your provider, failing which can also lead to cancellation of the policy. You also need to get an anti theft device installed in your vehicle for preventing auto theft. If these tips are followed then the premiums of the auto insurance will be within limit.

Auto insurance is something without which driving a vehicle is not only illegal but is also unwise. This is because; if ever you come across a big accident then the entire amount will have to be borne by you and this can cause a huge financial crunch. So, auto insurance is necessary.