What They Don't Teach You in High School

12 Questions and Answers Anticipating every question that you might have regarding auto insurance is kind of like expecting your teachers to have the big exam graded the day after you take the test . However, since it’s our job to know your mind, we put together the following list of questions and answers after speaking with your peers and fielding their questions (names have been changed to protect the innocent). Question: How does an insurance company calculate automobile insurance premiums? Answer: Auto premium is based on three primary factors: how long you’ve had your license, how many miles you drive in a year, and how many accidents or tickets you have. The insurance company can also use a variety of secondary factors to determine premium, but the most important secondary factor is the frequency and severity of claims the company has experienced in the area where you live. Since claim experience differs between companies, the premium charged by insurance companies can greatly vary. That’s why you need to shop around. Question: Why does my policy cost so much? Answer: Auto insurance costs more for people who have little driving experience. Accident statistics show that newer drivers and drivers who are teenagers and young adults have an increased likelihood of accidents. As you get older and gain more driving experience,your premium will go down. However, you won’t enjoy lower premium rates if you get too many tickets or have too many at-fault accidents along the way. Question: Can an insurance company raise my premium because of tickets or accidents? Answer: You bet they can! Your premium is partially based on your own driving experience. If you have tickets or at- fault accidents, you will be charged an additional surcharge based on the type of ticket or accident for which you have been cited. The more tickets and accidents you have, the higher your premium.