When you hear car insurance commercials, whether on TV or in magazines, you can hardly avoid seeing them. Whether they are humorous or serious, these commercials often promise you the lowest cost when you purchase your automobile coverage directly from their company. However, the fact of the matter is that the majority of auto insurance companies charge a substantial amount for their services, especially when you factor in the extra premium that they charge you each time you make a claim.

 

 

The reason that car insurance agent and insurance companies charge so much for their services is that it is often a much bigger expense to cover an accident or damage to property than it is to pay for auto insurance premiums. It costs less to cover damage to other people's personal property than it does to pay for the repair or replacement of your own vehicle. If you were to pay a large sum of money upfront each year in order to purchase car insurance coverage, then your premiums would soon begin to rise. Since this is not a feasible financial option for most drivers, it makes sense for the car insurance agents and insurance companies to take their time in determining how much of a risk you actually present and to raise rates gradually in order to recoup at least some of the costs of insuring your vehicles.

 

 

Because auto insurance policies are usually sold to individuals, not corporations, the insurance companies are allowed to pass on their costs to their customers. This means that each time you drive a car, you are charged a flat fee for the coverage that you require. This flat fee is calculated based on the total mileage that you are responsible for as well as the amount of the insurance that you have purchased. The insurance company will use a formula to calculate what your rate will be based on these figures. Some factors that go into the formula include the age of the driver, the location of where you live, your credit score, and whether or not you have a spotless driving record. Many of these factors can be easily manipulated by the customer with the correct amount of research and education on how to qualify for lower rates.