Whether you're at the grocery store or the mechanic, you can expect to receive a product or service in exchange for your payment. Auto insurance premiums are different—in this case, you pay every month, hoping you won’t have to cash in on the reward. However, many people wonder where the money is going. Below is more information about these monthly sums to help you understand them.
What Are Insurance Premiums?
When you want to protect a car, recreational vehicle, or motorcycle from threats, you gain peace of mind by securing an insurance policy. To retain this policy, you must pay a premium, which is a predetermined amount of money per month. The insurance company sets this amount and must keep your contract valid for as long as you pay. This is separate from the deductible, which is the amount of money you must pay out of pocket when filing a claim.
What Determines the Premium Amount?
The baseline for insurance premiums depends on the type of policy you have. For example, premiums are higher for a plan that protects a sports car than they are for a moped. However, many factors can further influence the amount. The more your property is at risk, the more expensive it will be to insure. This means that if two vehicles are similar, the one in a flood-prone area will require a higher premium.
You can also lower your premium amount by raising the deductible. This means you'll spend less money monthly, but more when you file a claim. If you modify your property to make it safer—such as upgrading your car's airbags or taking a motorcycle safety course—you could also lower the monthly premiums.
If you still have questions about setting the terms of your auto insurance policy, contact 1st Choice Insurance in Fairfield, OH. This family-owned and -operated agency will point you to the right plan for your needs, as well as your budget. They also offer policies for high-risk drivers, regardless of your credit score. To learn more about their auto insurance offerings, visit them online. Call (513) 860-0666 to speak with an agent today.