What is an auto insurance premium?

Answer 1

An auto insurance premium is the cost one pays for auto insurance. Stated otherwise, it is the consideration that one pays for the insurer to bear the risk of payment for covered occurrences.This premium is usually paid annually, monthly, or at some other interval that the insurer permits.

An insurance premium derives from a "rate", which is an actuarial concept. Roughly defined, it is the cost of a unit of insurance, with that unit generally being $100.

Rates, from which premiums are derived, for auto premiums,depend upon several factors. Some include:

1. The nature of the coverage (for example, collision or liability)

2. The make and model of the vehicle

3. The age and driving history of the primary driving

4. The number of miles per year driven

5. Whether the vehicle is used mainly for personal or business purposes.