A lot of auto owners wonder about car insurance calculators and if they can be an accurate way to determine the costs of different levels of coverage. Car insurance can be a confusing subject for drivers, especially when there are so many products and features often described with industry jargon and sometimes inscrutable terminology.
But despite all of those obstacles, they are so popular that nearly every car insurance company offers them in one form or another! How can this be? What is it about car insurance calculators that make them such a valuable service for auto insurers to provide?
The truth is, just about every customer for car insurance is very sensitive about price, and since car insurance is required for nearly all drivers, with so many auto insurance providers, competition for customers is high. So, how do car insurance calculators work?
The first series of steps in getting an insurance quote is to determine who is being insured and what kind of vehicle they are driving. The number of drivers on the policy and their ages is included, then the years of the various vehicles are added to produce a risk profile for the policy. Older drivers are generally at lower risk for accidents and older vehicles are generally not as expensive to replace. Both of these factors reduce the costs of premiums, as payouts will be lower in the event of a covered accident or theft.
Since auto insurance assumes the risk for any financial obligations of a covered driver, the next two most important questions are the income and assets of the policyholder and whether they have health insurance or not. Injuries sustained in an accident could be the responsibility of the health insurer or the auto insurer if the car insurance policy includes coverage for injuries or medical expenses arising from a covered accident. These two potential risks affect the overall profile.
Car insurance calculators also quite often provide potential customers with ways to select features of their policy.
Among these features is the total deductible. A lot of car insurance customers will often select a high deductible because it will reduce the premiums on the policy, but those customers sometimes don’t understand is that in the event of a covered accident, the deductible often must be paid to obtain the coverages in the policy. Insurance policies with no deductible cover all of the costs of an accident, damage to a vehicle, or theft of a vehicle, with no payments or portions of the damages paid by the policyholder.
In addition to variable deductible settings, something customers should know about car insurance calculators is they allow for the inclusion of different kinds of coverages to see how they will affect the overall cost of the policy and how much each premium payment will be. Among these different kinds of coverage are uninsured motorists, which is often a very popular additional feature on an auto insurance policy because it gives drivers peace of mind in the event they are in an accident and the other driver has no insurance.
Another type of important coverage is property damage. This kind of policy feature varies from company to company and policy to policy, but it is also a very important kind of coverage to keep in mind. Newer vehicles are very expensive to replace, and it’s common in car accidents that there may be parked vehicles, fences, signs, guard rails, and sometimes even structures that can be involved in a crash. All of those potential sources of damages must be covered, and auto insurance companies offer property damage liability insurance as one way of addressing the risk. Higher limits in this category can increase premiums.
Car insurance calculators are a great way to estimate premiums and the costs of obtaining coverage in a variety of circumstances, especially for drivers that are trying to compare coverage’s between two different companies or two different policies offered by the same company. They are also a great way for customers to become aware of new coverages and features that might not be a priority when they are simply comparing policies. This leads to a better product and a better value for customers of auto insurance companies.
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