Paying for Auto Insurance

The cost of auto insurance varies greatly. There are several factors that an insurance company considers as they structure their fees, including your age, sex, where you live, what type of car you have, your driving record - even your credit history. Insurance companies all have their own criteria, so shop around for the best deal.

Driver's License

When you buy an insurance policy, you can pay for the entire policy at once, or make monthly payments called premiums. When you file a claim, there is a charge called a deductible that must be paid before the insurance company pays out on your policy. The deductible is the amount of money you are responsible for paying to cover part of the cost of damage or repairs. Depending on the terms of your policy, the insurance company will cover the rest of the cost.

You do have some leeway as to how your policy will be structured. If you are more comfortable with low monthly payments, get a high deductible. If you want a low deductible, you can pay a higher premium. Consider a simple example: A consumer opts for a policy with a $500 deductible and a $175 premium, or monthly payment. But if the consumer changes the deductible to $1,000, the premium may fall to $80. If the consumer started with the $1,000 deductible and reduced it to $500, the premium would have increased from $80 to $175. Remember that the deductible must be paid in full before the benefits of your policy kick in.