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How An Auto Insurance Quote And Your Monthly Premium Are Connected

Thursday, April 15th, 2010

When purchasing an auto insurance policy, the first piece of information that most consumers will receive is an auto insurance quote. This can be done online or over the phone, and typically represents the cheapest auto insurance that the company has to offer. The consumer, intrigued by the low auto insurance premium, makes further inquires with the company, and eventually arrives at an agreement that includes all of the coverage that they need. However, when their first monthly car insurance bill arrives, they note that the rate quoted bears little resemblance to the auto insurance premium they are expected to pay. For many, this comes as a shock, as it seems only reasonable that the original quote and the eventual premium should be the same. Unfortunately, this is not often the case. While the two are connected, there is a wide gap which lies between an initial quote and the eventual payment.

Auto insurance quotes are generated on a low-cost, best-case scenario. They include the lowest coverage levels mandated by the state, and assume a clean driving record, well-maintained car and a host of other factors that often do not all occur together. Quotes will often say things like “as low as” or “starting from.” These give an indication that although the rate could potentially be that low, it will only occur under the most optimal of conditions. Once a basic auto insurance policy has been inquired and agreed upon, most insurance providers will begin speaking to their clients about more specific add-on coverage that they may want, or may encourage clients to increase the minimum liability that they are paying. While all states require some form of personal and property liability coverage, the basic amounts are often far too small to actually cover everyone and everything damaged in an accident. Having extra coverage is very useful, but will also increase the basic monthly premium paid. Similarly, add-on coverage such as uninsured motorist coverage, which is not mandated by all states, can be very useful but will result in a discrepancy between the original quote and the eventual price.

At its heart, an auto insurance quote represents the best monthly premium for a customer under ideal conditions. Their actual monthly rate is a reflection of their initial quote, but with extra coverage, add-ons, and their specific car details and driving history factored in. The two numbers are related, but the chances of paying the rate advertised in a quote are slim to none. While this may seem unfair, it is better to have more coverage in an accident than the basic amounts offered, as a higher premium may cost the consumer initially, but can save a great deal in the long run.

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