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How Do Car Insurance Companies Calculate The Premium Rates?

car insurance rates

The business of insurance is called underwriting. The company enters into a contract (called a policy) and agrees to indemnify a group of people like you against defined losses. So it uses some heavy duty math to work out the probability of the losses being incurred. It’s called risk assessment and relies on a complicated use of statistics. For vehicle insurance, the companies collect the details from every reported traffic accident in the US looking at the age, sex and occupation of the driver, the make and model being driven, the time of day, the road conditions, and the extent of the damage. The insurers share the information on the current costs of replacement parts and the labor to fit them. They also manage to talk the health insurance companies into sharing their current costs on medical treatment for those injured in traffic accidents. With all this information, they can make good estimates of the cost of loss, i.e. the total amount they may have to pay out if they insure, say, 100,000 drivers. They take this estimate, add the cost of running the insurance company and a profit margin. This total is then divided between all the 100,000 as their premiums. Some companies divide the total equally so the good drivers subsidize the bad. But the majority adjusts the individual amounts based on the driver’s safety record. That way, each policy holder pays more or less depending on how well he or she drives. This is fairer.

But, to cut costs, some insurance companies make more general assumptions about the likelihood of losses. Instead of personalizing the risk assessment, they focus the assessment on generalities. The most common are the use of the zip code. In some areas of a town or city, there are higher levels of vehicle theft and vandalism. Some areas have more people driving while intoxicated or impaired by drugs. Because of the design of the local road system, there may also be a higher number of accidents. The insurers, therefore, charge everyone living in those areas a higher premium. Apart from the unfairness at an individual level, some lawyers believe it is active discrimination because many of the zip code areas loaded with higher premiums have higher concentrations of particular racial or ethnic groups. California has formally prohibited insurance companies from using zip codes, credit scores and other factors not directly relevant to the assessment of driver safety. In those states, insurers continue to trade and make a profit. It has not been the end of the world they predicted.

So who has the cheapest auto insurance?

So, depending on the US state in which you live, your premium may either be calculated based on your personal driving record, or it may be based on your zip code and credit score. Either way, the task of finding the cheapest car insurance remains the same. You have to shop around the companies licensed to sell policies in your state and find the best deal. If there is active competition between the insurers, the premiums will be lower and you will find the cheapest car insurance without too much difficulty. But if the state is unregulated and insurers do not compete, it will be more difficult to find a cheap policy.

No One Loses, or Who Has the Cheapest Auto Insurance

Who Has the Cheapest Auto Insurance – Our Bet

When my wife and I started shopping around for more affordable car insurance, we decided to make a little competition out of it. Finding car insurance isn’t exactly the most fun task in the world so we upped the stakes a bit. Whoever found the best deal won, loser had to cook dinner for a week.

We gave ourselves a one week time limit which wasn’t exactly fair. I work regular business hours and my wife works three night shifts a week at the hospital as a nurse. She had a lot more free time during the day to shop around. Does it sound like I’m making excuses? Probably. But I still say that the rules weren’t exactly fair.

Anyway, the first thing I did was ask around at work who had the cheapest auto insurance. I was a little bit surprised by how willing people were to share this information. Like, everyone pretty much told me exactly what they paid every month. It wasn’t long before I realized that wasn’t really going to tell me anything. After all, everyone had a different car, some people had multiple cars, and so on. So, I lost a whole day thinking I was smart by just asking around first. I thought I’d just go home and look up what I thought was the best deal.

My wife, on the other hand, made her pick on the first evening we’d started the competition. That’s why she said that our scheduled didn’t matter. While I was watching the game and falling asleep on the couch, she was able to find the cheapest policy by spending, like, a half hour online.

So who has the cheapest auto insurance?

She won. Well, she won the contest, in the end we both won because we ended up saving a good amount on our insurance. It was my fault, really, I was going to do the same thing she did when I got home from work with some leads that night. But she beat me to it. She found an awesome deal on very cheap car insurance no deposit online. She’s lucky, I’m not I guess. I was looking for more expensive full coverage insurance plans.

As per our agreement, I began planning the menu for the week. I wasn’t a bad cook but I hated meal planning. Which is why, by the fourth night, my wife suggested we take the money we saved on insurance as treat ourselves to a nice dinner. She’s such a gracious winner, I do have to give her credit. I don’t know if I’d have been so nice about the whole thing. If only I’d decided to search full very cheap car insurance no deposit; then maybe I would have won!

No time to find a good car dealership

Why is finding a good car dealership so hard?

I wasn’t sure how to go about finding good car dealerships in Toronto. To be honest, I didn’t have time to do the footwork I knew I needed to do. There just weren’t enough hours in the day for me to go shop around, get offers on my car, look for a new one, and make sure everything was the best it could be.

That’s where the internet comes in really handy. I was a little nervous about selling my car on a car listing website, but the good thing about the internet is everything has reviews. All you have to do is search for a business, online or otherwise, and you can usually get a somewhat reliable impression of whether or not they’re worth doing business with. So, that’s what I did. I spent some time researching online during lunch breaks and in the hour or two I had before bed when I got home.

When I found a good site ( This one: https://www.carcanuck.ca/), I figured that there was no harm in buying a car from an online car listing website, either. So, I started looking and was so excited by what I came across. It saved me so much time, I found a car I wanted and was able to access a lot of information about it, right on the website. Then I could just go to the dealer where it was location and know exactly what I was looking at. The price was listed, I knew about any previous accidents. It was pretty sweet.

In the end, I was able to buy a new car and sell my old one pretty easily. And the best part is I didn’t have to spend days driving from dealership to dealership to try to find the best one. The internet pretty much did all that for me.

If you don’t have a lot of time, I can’t suggest this method enough. Maybe you feel like you need to physically go visit all these places and that’s fine, I don’t blame you. But I seriously did not have time to put in that much effort. I spent a few hours doing some pretty in depth research and walked away feeling pretty satisfied that I got the best deal and wasn’t taken advantage of. Not only that but I sincerely found a car that I absolutely love. I couldn’t have asked for a better experience.

Very Cheap Car Insurance no Deposit – I Forgot About Auto-Renew!

Has anyone else ever done this, right? You think you’ve budgeted your month perfectly – you know exactly how much you have spare to spend, what to put in your savings, all of that, and then all of a sudden, a huge charge gets taken out?

Yeah, guess who forgot about auto-renew?  Apparently, me of a year ago thought it would be easier than having to think about things in the future, and just said ‘sure, keep charging me’.

I’m kicking myself right now – I could have gotten a much better deal, and I was looking for some very cheap car insurance no deposit ( Found it here: http://www.verycheapcarinsurancenodeposit.com/), last week! I figured I’d swap over, not have to pay an upfront amount and save some money in the process. Since no deposit auto insurance is cheaper than regular insurance.

But no, apparently past me thought convenience was the better option. Well, if nothing else, it shows how much I’ve changed in the past year. Last year I was awful at managing my finances -I didn’t know how to find the best deals, and I kind of just kept my head in the sand whenever bills came up. This year I’ve been much better – I’ve learned how to keep track of my expenses, what to look for when taking out new policies or investing in more expensive things, and even started a savings account semi-successfully.

I think that’s why I’m so annoyed by the auto-renew thing – I’d actually planned it all out this time. I’d spent a while looking into the ins and outs of what exactly car insurance is, what it involves and what it covers. I’d worked out exactly what I wanted from my policy too, and unfortunately, the one that’s just renewed isn’t quite what I was hoping for! For a start, it’s got a deposit – which was something I was really hoping to avoid. Even with that, it’s got a much higher premium than some of the ones I found, so that’s another year of more monthly expenses than I was hoping for.

There is one blessing though – apparently past me was worried about having to pay huge sums out of pocket, so the deductible isn’t so bad. Still, I’ve written it on my calendar for next year, and made a note a month in advance so that it doesn’t happen again, and I can actually get the policy I want.