3 Things That May Increase The Costs Of Your Auto Insurance Policy

There are a lot of different factors that affect the cost of an auto insurance policy, but some of these are things you might not realize. Insurance agencies use algorithms to calculate premiums, and here are three things that could potentially affect the rates you pay.

A Lapse in Your Coverage in the Past

Keeping up with your current auto insurance policy helps you prevent a lapse in coverage. A lapse in coverage means there was a time when you did not have any auto coverage at all. You may have a good reason for allowing a lapse, but that does not matter to insurance companies.

Insurance companies view lapses with negativity. They do not like seeing them in a person's record. As a result, insurance companies will sometimes place people in a high-risk driver category from a lapse in coverage.

If you are ever tempted to let your policy lapse, you should consider an alternative. For example, if you will not own a car for the next year, you do not have to cancel your policy. You could purchase a non-owner policy instead. Non-owner plans offer coverage for an affordable price to people who want coverage but do not own a car.

Paying Your Bill in Monthly Installments

Do you pay your insurance bills by the month? Even if you elect automatic withdrawals for your monthly payments, you might be paying a fee each month for the service. Do you want to save money? If so, pay your six-month premium all at once at the start of the policy. You might not get a discount for doing this, but you would avoid paying the monthly fee that most agencies charge for accepting monthly payments.

Having a Deductible That Is Too Low

The third thing that can increase the costs of your policy is a low deductible. A low deductible is desirable, as it requires paying less money out of your pocket if you file a claim. The trouble is that it costs more to have a lower deductible. If you want to save money, you could raise this amount. If you are not sure how much you could save by doing this, ask an agent.

Understanding how insurance companies calculate rates is helpful to know if you need insurance. To receive a quote for coverage, call an insurance agent today and supply him or her with all the information the agent needs.