Tuesday, November 2, 2010
Car insurance is legally required for each driver in all states in the USA except for New Hampshire. The amount of your car insurance premium is determined by how much of a risk you pose. As with all types of insurance, the higher the risk you pose, the more likely you are to need to use the insurance.
Different car insurance vendors specialize in catering to different groups of risk. A car insurance company that insures all levels of risk will likely have higher grouped rates because there are higher risk inviduals who are included in the group. The benefit to these groups is that if you get in a couple of accidents, or if you get a few tickets, you can still keep the same car insurance despite any problems.
Some car insurance companies only focus on insuring those with 1 or less accidents or moving violations. The risk in this group is lower, so the car insurance premiums are lower for the entire group as well. The car insurance company benefits because this low risk group has less of a likelihood of needing to use the insurance. The driver/consumer benefits because of lower car insurance payments. The con to this type of group is that if you exceed the 1 accident or moving violations, you will be dropped from coverage or won't be allowed to renew until these fall off of your driving record.
The rule of thumb is that the lower the risk, the lower your car insurance premiums.